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Currency Markets Await Central Bank Decisions; Aussie Breaks Higher

David Becker
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Currency Markets Await Central Bank Decisions; Aussie Breaks Higher

The AUD rallied following stronger than expected Australian employment data, which rose 14.2k in April. AUDUSD rose above 0.9390 for the first time mid-April. Better than expected trade data also released on Thursday in China, allow the risk on trade to gain traction , pushing the Australian currency to 3-week highs.

The Australia April employment report came in stronger than expected at +14.2k compared to a median estimate of a climb of 9.0k jobs. The unemployment rate came in unchanged at 5.9%, remaining below the 6.1% cycle peak that was seen in February. The workforce participation rate fell marginally to 64.7% from 64.8% in March, as expected.

China’s April trade numbers beat expectations with exports rising 0.9%, recovering from the unexpected 6.6% drop in the previous month. Imports rose fractionally at +0.8%, correcting after declining by 11.3% in March. The trade balance rose to a $18.5 billion surplus, above the median for $16.7 billion, after $7.7 billion in the previous month.

The AUDUSD moved higher breaking through short term resistance and poised to test the 0.9465 highs made in mid-April. Support is seen near the 10-day moving average near 0.9296.

Momentum on the currency pair has turned positive with the MACD (moving average convergence divergence) index generating a buy signal. This occurs when the spread (the 12-day moving average minus the 26-day moving average) crossed above the 9-day moving average of the spread. The MACD index moved from negative to positive territory confirming the buy signal.

The relative strength index (RSI) which is a momentum oscillator that measures overbought and oversold levels, moved higher with price action which reflects accelerating positive momentum while printing near 62, which is on the upper end of the neutral range but below the overbought trigger level of 70.

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