Forexpros – The Australian dollar tumbled to a four-month low against its U.S. counterpart on Friday, as the release of a weaker-than-forecast U.S. nonfarm payrolls report added to concerns over the outlook for the country’s economic recovery.
AUD/USD hit 1.0469 on Monday, the weekly high; the pair subsequently consolidated at 1.0177 on Friday, tumbling 2.67% over the week.
The pair is likely to find support at 1.0125, the low of December 30 and resistance at 1.0277, Friday’s high.
The Department of Labor said the U.S. economy added 115,000 jobs in last month, far short of expectations for a 170,000 increase, after adding an upwardly revised 154,000 jobs in March.
The unemployment rate ticked lower to 8.1% but the labor participation rate also declined, as fewer people sought jobs.
The weak data added to uncertainty over the strength of the U.S. recovery and fuelled speculation the Federal Reserve could implement a third round of quantitative easing measures to stimulate growth.
Risk appetite was also hit by concerns over political uncertainty in the euro zone, in the run-up to weekend elections in Greece and France, amid fears leadership changes could hinder attempts to resolve the regions debt crisis.
The Australian dollar had weakened broadly on Tuesday after the Reserve Bank of Australia surprised markets with a larger-than-expected rate cut, in an attempt to boost the nation’s commodity-linked economy.
The RBA said it was cutting its cash rate to 3.75% from 4.25%, the largest reduction in three years and the first rate cut since December. Economists had been expecting a cut of 0.25%.
The central bank said in an accompanying rate statement that the rate cut was “judged to be necessary in order to deliver the appropriate level of borrowing rates”.
In the week ahead, investors will be closely watching election results in Greece and France, while in the U.S. a speech by Fed Chairman Ben Bernanke in Chicago on Thursday the main focus for the greenback.
China is to release a flurry of data, including reports on retail sales and inflation that will allow investors to gauge the strength of the world’s second largest economy.
Ahead of the coming week, Forexpros has compiled a list of these and other significant events likely to affect the markets.
Monday, May 7
Australia is to produce official data on building approvals and on retail sales, the primary gauge of consumer spending, followed by industry data on job advertisements and business confidence.
Tuesday, May 8
Australia is to release official data on the trade balance, the difference in value between imported and exported goods.
Wednesday, May 9
The U.S. is to produce government data on crude oil stockpiles. The U.S. is also to hold a 10-year government bond auction.
Thursday, May 10
The U.S. is to produce official data on the trade balance, as well as government data on unemployment claims and import prices.
Additionally, the U.S. is to release government data on the federal budget balance and the Treasury currency report, while Federal Reserve Chairman Ben Bernanke is due to speak. His comments will be closely watched for any clues to the future possible direction of monetary policy.
Friday, May 11
The U.S. is to round up the week with government data on producer price inflation, a key gauge of consumer inflation, followed by a preliminary report by the University of Michigan on consumer sentiment, a leading indicator of consumer spending.
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