Forexpros – The Australian dollar fell to a six-month low against its U.S. counterpart on Friday, after surprisingly weak U.S. employment data and concerns over Spain’s financial troubles weighed on market sentiment.
AUD/USD hit 0.9672 on Friday, the pair’s lowest since November 25; the pair subsequently consolidated at 0.9704 by close of trade on Friday, declining 0.59% over the week.
The pair is likely to find support at 0.9621, the low of October 6 and resistance at 0.9761, Friday’s high.
Risk appetite came under pressure after the Department of Labor said that the U.S. economy added just 69,000 jobs in May, far below expectations for a gain of 150,000, while the unemployment rate ticked up to 8.2% from 8.1%.
A separate report showed that manufacturing activity in the U.S. slowed in May. The Institute for Supply Management’s manufacturing index fell to 53.5 from 54.8 in April, against expectations for a decline to 53.9.
The weak data added to concerns that the economic recovery in the U.S. is losing momentum, which could lead to a third round of quantitative easing from the U.S. Federal Reserve.
Meanwhile, market sentiment remained vulnerable after data on Friday showed that unemployment in the euro zone rose to a record high of 11% in April, adding to concerns over the worsening of the euro zone’s debt crisis.
The data came after the yield on Spanish 10-year bonds climbed to a euro-era high of 6.7% on Wednesday, as the lack of a convincing plan to recapitalize stricken lender Bankia fuelled fears that Madrid will be forced to seek an international bailout.
Earlier in the week, official data showed that building approvals in Australia dropped unexpectedly by 8.7% in April, after a 6% rise the previous month. Analysts had expected building approvals to rise 0.3% in April.
A separate report showed that Australian retail sales declined 0.2%, disappointing expectations for a 0.2% rise and following a 1.1% increase the previous month.
In the week ahead, investors will be eyeing the interest rate decisions by the European Central Bank and the Reserve Bank of Australia.
Market participants will also be watching Thursday’s testimony on the economic outlook by Fed Chairman Ben Bernanke for any indications that the central bank is considering more monetary easing.
Ahead of the coming week, Forexpros has compiled a list of these and other significant events likely to affect the markets.
Monday, June 4
Australia is to release industry data on job advertisements, as well as official data on company operating profits, a leading indicator of economic health.
Later in the day, the U.S. is to produce official data on factory orders, a leading indicator of production.
Tuesday, June 5
The RBA is to announce its benchmark interest rate. The announcement is to be followed by the bank’s rate statement, which discusses the economic outlook. In addition, Australia is to publish official data on the current account as well as a report on service sector activity.
In the U.S., the Institute for Supply Management is to release a report on non-manufacturing activity, a key indicator of economic health.
Wednesday, June 6
Australia is to produce official data on first quarter gross domestic product, the broadest measure of economic activity and the primary gauge of the economy’s health.
Later Wednesday, the U.S. is to release revised data on nonfarm productivity, followed by government data on crude oil stockpiles, while the Federal Reserve is to release its Beige Book.
Thursday, June 7
Australia is to produce official data on employment change and the country’s unemployment rate, a leading indicator of economic health.
Also Thursday, the U.S. is to release government data on initial unemployment claims, while Fed Chairman Ben Bernanke is to appear before the Joint Economic Committee, in Washington.
Friday, June 8
Australia is to produce official data on the trade balance, which is the difference in value between imported and exported goods and services, followed by a report on home loans, a leading indicator of demand in the housing market.
The U.S. is to round up the week with government data on its trade balance.
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