Forexpros – The Australian dollar edged higher against its U.S. counterpart on Friday, paring some of the week’s losses as downbeat nonfarm employment data weighed on demand for the greenback amid renewed expectations for easing measures by the Federal Reserve.
AUD/USD hit 1.0243 on Wednesday, the pair’s lowest since January 13; the pair subsequently consolidated at 1.0307 by close of trade on Friday, shedding 1.35% over the week.
The pair is likely to find support at 1.0231, the low of January 13 and resistance at 1.0377, the high of January 12.
The Department of Labor said on Friday that U.S. nonfarm payrolls rose by 120,000 in March, far lower than expectations for a 203,000 increase. The previous months figure was revised up to 240,000, from a previously reported 227,000.
In addition, the U.S. unemployment rate ticked down to 8.2%, the lowest since January 2009, from 8.3% in February.
The weaker-than-expected data revived expectations that the Federal Reserve may implement a third round of quantitative easing, which would weaken the dollar.
The dollar strengthened broadly earlier in the week after the minutes of the Fed’s March meeting indicated that policymakers will refrain from launching a third round of easing unless the rate of economic growth falters or inflation drops below the central bank’s 2% targeted rate.
The Aussie fell to a three-month low against the greenback on Wednesday after official data showed that Australia posted a AUD0.48 billion trade deficit in February, disappointing expectations for a surplus of AUD1.12 billion and sparking concerns over an economic slowdown.
On Tuesday, the Reserve Bank of Australia held its benchmark interest rate at 4.25%, in a widely expected decision, but warned that may resume cutting interest rates as soon as April if weaker-than-expected growth slows inflation.
Commenting on the decision, RBA Governor Glenn Stevens said that “the board judged the pace of output growth to be somewhat lower than earlier estimated, but also thought it prudent to see forthcoming key data on prices to reassess its outlook for inflation, before considering a further step to ease monetary policy.”
Also Tuesday, official data showed that retail sales in Australia rose 0.2% in February, in line with expectations, after a 0.3% increase the previous month.
In the week ahead, investors will be eyeing a speech by Fed Chairman Ben Bernanke on Tuesday for any indications on what the future direction of monetary policy may be.
In addition, market participants will be watching developments in the euro zone, amid ongoing concerns over the threat of contagion from Spain.
Ahead of the coming week, Forexpros has compiled a list of these and other significant events likely to affect the markets.
Monday, April 9
Markets in Australia will remain closed due to the Easter holiday.
Tuesday, April 10
Australia is to publish industry data on job advertisements followed by a report on business confidence.
Elsewhere, Federal Reserve Chairman Ben Bernanke is due to speak at the Federal Reserve Bank of Atlanta Financial Markets Conference.
Wednesday, April 11
Australia is to publish a report by the Westpac Banking Corporation on consumer sentiment, a key indicator of consumer spending. The country is also to produce official data on home loans, a key gauge of demand in the housing market.
In the U.S., government data is to be released on import prices as well as crude oil stockpiles and the federal budget balance. The Fed is also to publish its Beige Book.
Thursday, April 12
Australia is to release a report by the Melbourne Institute on inflation expectations, followed by official data on employment change and the unemployment rate, an important signal of economic health.
Also Thursday, the U.S. is to produce official data on the trade balance, as well as government data on producer price inflation and initial unemployment claims.
Friday, April 13
The U.S. is to round up the week with official data on consumer price inflation and a preliminary report by the University of Michigan on consumer sentiment, a key gauge of consumer spending. Fed Chairman Bernanke is also due to speak later Friday.
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