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AUDUSD hits a two and a half year low

Published October 5, 2018

Author: Dennis Li

With the risk-off sentiment currently dominating the global markets the Aussie dollar remains broadly under pressure against its major peers. The AUDUSD touched its lowest level since 12 February 2016 at 0.7062 after further strong US economic data released overnight.

  • The number of Americans filing for unemployment benefits fell to a near 49-year low last week, indicating a sustained labor market strength which could continue to support its economic growth.
  • The yield on US 10-year Treasury note climbed to a 7-year high, marking its largest daily jump since the 2016 US presidential election which could further support the Fed’s December rate hike.
  • New orders for US-made goods recorded their biggest increase in nearly a year in August, boosted by a surge in demand for aircraft.
  • The Italian government on Thursday disregarded concerns that the European Commission would reject its plan to raise deficit spending next year and signalled that it would not backtrack amid market pressure.
  • According to Finnish central bank chief Olli Rehn, the ECB’s role is not to support the Italian bond market after its recent sell-off but to set policy for the whole of the euro zone.

There is potential in the next 24 hours for the AUD to break below support or experience a modest rally with local retail sales data out at 11:30am Sydney time and US non- farm payrolls data released tonight. The American data will be more closely watched now that they are at “full employment” with the market looking for signs of the elusive wage growth. Barring any real move after the release of the aforementioned data, China’s return to the markets after a week off may provide the spark for a decent move.