Forexpros – The Australian dollar declined against its U.S. counterpart Friday, erasing the week’s gains as risk sentiment strongly weakened following the release of disappointing U.S. employment data and amid ongoing global growth concerns.
AUD/USD hit 1.0178 on Friday, the pair’s lowest since June 29; the pair subsequently consolidated at 1.0208 by close of trade on Friday, dropping 0.51% over the week.
The pair is likely to find support at 1.0223, the low of June 20 and resistance at 1.0328, last Thursday’s high.
The Aussie fell to a one-week low against the greenback on Friday, after the U.S. Bureau of Labor Statistics said the economy added 80,000 jobs in June, below market forecasts for a gain of around 90,000.
April figures were revised to 68,000 from 77,000 jobs, while May’s numbers were revised to 77,000 from 69,000.
Although the data was weaker than expected, many investors said it was not bad enough to spur the Federal Reserve to launch a third round of quantitative easing, sending the greenback broadly higher.
The report also showed that the U.S. unemployment rate held steady at 8.2% in June, in line with expectations.
Risk sentiment also came under pressure as a series of stimulus measures announced by world central banks sparked fresh concerns over the outlook for global economic growth.
European Central Bank President Mario Draghi said on Thursday that the economic outlook faces downside risks, adding that indicators for the second quarter point to weakening growth in the euro zone.
Draghi refused to speculate, however, on the chances of a third round of Long Term Refinancing Operations, which provides cheap loans to European banks to encourage them to lend.
The comments came after the central bank cut its benchmark interest rate to a record low 0.75% in July, in a bid to bolster faltering growth in the region.
In addition, Bank of England policymakers voted to increase the stock of asset purchases financed by the issuance of central bank reserves by GBP50 billion to GBP375 billion, in order to shield the recession hit U.K. economy from the ongoing debt crisis in the euro zone.
Elsewhere, China surprised traders by cutting interest rates for the second time in less than a month on Thursday, signaling that growth is slowing more than Beijing expected.
Meanwhile, in Australia, official data showed that the country’s trade deficit widened-less-than expected in May, widening to AUD0.28 billion from a deficit of AUD0.26 billion the previous month. Analysts had expected the trade deficit to widen to AUD0.50 billion in May.
In the week ahead, investors will be closely watching ECB President Draghi’s testimony before the European Parliament, on Monday, as well as a two-day meeting of euro zone finance ministers, amid expectations for a final agreement on aid for Spanish banks.
Markets will also be eyeing the minutes of the Fed’s latest policy meeting as well as U.S. data on trade balance and unemployment claims.
Ahead of the coming week, Forexpros has compiled a list of these and other significant events likely to affect the markets.
Monday, July 9
Australia is to release industry data on job advertisements.
Euro zone finance ministers are to meet in Brussels for a first day of talks.
Tuesday, July 10
Australia is to release a report on business confidence.
Meanwhile, euro zone finance ministers are to hold a second day of talks in Brussels.
Wednesday, July 11
Australia is to publish a report by the Westpac Banking Corporation on consumer sentiment, a leading indicator of consumer spending, followed by official data on home loans, an important gauge of demand in the housing market.
Later Wednesday, the U.S. is to release official data on trade balance and crude oil stockpiles, followed by the minutes of the Federal Reserve’s most recent policy-setting meeting. The minutes will be closely watched for signs of future monetary policy decisions by the central bank.
Thursday, July 12
Australia is to publish a report by the Melbourne Institute on inflation expectations, followed by official data on employment change and the country’s unemployment rate.
The U.S. is to publish government data on unemployment claims and official data on import prices, followed by the monthly Treasury statement.
Friday, July 13
The U.S. is to round up the week with government data on producer price inflation and a preliminary report by the University of Michigan on consumer sentiment.
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