Forexpros – The Australian dollar slipped against its U.S. counterpart on Friday, trimming some of the week’s gains as renewed concerns over the debt crisis in the euro zone dampened demand for riskier assets.
AUD/USD hit 1.0330 on Wednesday, the pair’s highest since November 14; the pair subsequently consolidated at 1.0212 by close of trade on Friday, jumping 3.86% over the week.
The pair is likely to find support at 1.0059, the low of November 16 and resistance at 1.0397, the high of November 9.
Market sentiment was boosted on Friday after official data showed that the U.S. unemployment rate dropped unexpectedly to a two-and-a-half year low of 8.6% in November, as the U.S. economy created 120,000 new jobs.
But the Aussie erased earlier gains as skepticism over whether the euro zone’s bailout fund, the European Financial Stability Facility, can contain the region’s debt crisis and speculation over a potential downgrade of Spain weighed on risk appetite.
The Australian dollar rallied 2.74% against the greenback on Wednesday after six major central banks announced a coordinated action to enhance the capacity to provide liquidity to the global financial system.
In a joint statement, the Federal Reserve, the Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank and the Swiss National Bank said they had agreed to lower dollar swap rates to prevent a lack of liquidity in the global financial system.
The announcement came after China said that it plans to cut bank’s reserve requirement ratios in an effort to help boost liquidity and support the world’s second largest economy amid global market turmoil.
On Thursday, the Aussie weakened after official data showed that retail sales in Australia rose less-than-expected in September, ticking up 0.2% after a 0.4% increase the previous month.
A separate report showed that Australian building approvals dropped unexpectedly in October.
In the week ahead, investors will be closely watching the ECB’s policy meeting on Thursday, amid expectations for a 0.5% rate cut by the bank. Meanwhile, EU leaders are to hold a summit meeting to address the region’s crisis on Friday.
Also next week, the U.S. is to release data on service sector activity and jobless claims, while the Reserve Bank of Australia is to announce it benchmark interest rate.
Ahead of the coming week, Forexpros has compiled a list of these and other significant events likely to affect the markets.
Monday, December 5
Australia is to publish a report on the number of jobs advertised in newspapers and online, an important indicator of health in the housing market. The country is also to release industry data on service sector activity as well as government data on company operating profits.
In the U.S., the Institute of Supply Management is to release a report on service sector activity, a leading indicator of economic health. The U.S. is also to publish government data on factory orders, a leading indicator of production.
Tuesday, December 6
The Reserve Bank of Australia is to announce it benchmark interest rate. The bank’s rate statement will be closely watched for its insights on the economic outlook. Australia is also to release data on the current account balance.
Wednesday, December 7
Australia is to release official data on third quarter GDP, the primary measure of economic activity and the foremost indicator of the economy’s health.
Later in the day, the U.S. is to release government data on crude oil stockpiles.
Thursday, December 8
Australia is to publish official data on employment change and the unemployment rate, a leading indicator of economic health.
Also Thursday, the U.S. is to publish its weekly report on initial jobless claims, the nation’s earliest economic data.
Friday, December 9
The U.S. is to round up the week with data on the trade balance, while the University of Michigan is to release preliminary data on consumer sentiment and inflation expectations, leading indicators of economic health.
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