AUD/USD

With unemployment spiking and broader measures of labour market slack increasing, the risk of strong wages growth sparking renewed inflationary pressures looks to have past.

The US dollar suffered its worst day of the year and Fed fund futures now imply with near certainty that the Fed will cut by September. And that saw AUD/USD breakout in style and USD/JPY roll over, breaking below two handles on Wednesday.

The US dollar continued to weaken ahead of today's US CPI report, helping EUR/USD and AUD/USD move towards key resistance levels. Yet traders will require a soft set of inflation figures for the pairs to stand any chance of breaking resistance.

Australian wage pressures undershot expectation in the March quarter, denting the prospect of another rate hike from the RBA. AUD/USD managed to shake off the news within seconds, underlining that US CPI mains the only game in town for traders on Wednesday.

The AUD/USD forecast is turning somewhat positive, both from a macro perspective and technical viewpoint.

The US dollar has regained its footing heading into a Powell speech and US PPI report, whilst USD/JPY looks set to break resistance and head for 157.

The latest NAB Business survey revealed a big slowdown in hiring in April, with new orders also declining at the fastest pace in several years. Importantly, the weakness coincided with a noticeable deceleration in up and downstream price pressures.

The US dollar snapped its 3-day winning streak and formed a bearish outside day, helping gold reach our upside target. EUR/USD and AUD/USD are now eyeing a move towards key resistance levels.

A surprise rise in US wage pressures weighed on sentiment on the eve of the Fed meeting, sending the US dollar broadly higher, Wall Street lower as AUD/USD suffered its second worst day of the year.

The growth engine of the Chinese economy unexpectedly decelerated last month while Australian retail sales are growing at the weakest pace on record outside one-off economic shocks, putting AUD/USD under renewed pressure on Tuesday.

Despite the MOF's best attempts, USD/JPY is holding above 155 - a level traders are clearly watching. AUD/USD shows the potential to extend gains into 66c, but having risen for 6 days already then perhaps the upside potential it limited.

May has historically been the second-worst month for EUR/USD (-0.62%) and GBP/USD (-0.37%) - see what to watch for from the other major currency pairs!

There seems to be no fear in shorting then yen, given large speculators pushed net-short exposure to the second highest level on record last week. EUR/USD and GBP/USD also flipped to net-short exposure.

AUD/USD is charging higher, powered by a hotter-than-expected Australian March quarter consumer price inflation report that has seriously dented the case for rate cuts from the Reserve Bank of Australia this year.

The US 2-year bond yield remains support, which is capping the yield at 5% and weighed on the US dollar. And that helped AUD/USD rise for a second day ahead of a key AU CPI report.

Whether you want to call it a bullish hammer, dragonfly doji, false break or morning star, the price action on the AUD/USD daily suggests the path of least resistance is higher in the near-term.

Australians are none the wiser as to what’s happening in the domestic labour market with another volatile jobs report creating more questions than answers. AUD/USD is largely unmoved, leaving offshore factors to remain in the driving seat.