AUD/USD and NZD/USD Fundamental Daily Forecast – “Risk-Off” Sentiment Encouraging Profit-Taking

The Australian and New Zealand Dollars are trading sharply lower on Thursday as European stocks weakened shortly after the opening and as U.S. stock index futures retreated as investors feared another round of shutdowns due to soaring coronavirus cases in Europe and the United States.

Optimistic news on COVID-19 vaccines had been propping up the global equity markets, creating demand for higher risk currencies like the Aussie and Kiwi. However, signs of further COVID-19 restrictions in the U.S. are threatening the pace of the economic recovery, which is encouraging higher risk asset investors to book profits while increasing the appeal of the safe-haven U.S. Dollar.

At 09:03 GMT, the AUD/USD is trading .7267, down 0.0039 or -0.54% and the NZD/USD is at .6886, down 0.0037 or -0.54%.

Australia October Employment Soars, Jobless Rate Ticks Up

Australian jobs surged past all expectations in October, though the unemployment rate still ticked up to 7% as more people went out looking for work, Reuters reported.

Figures from the Australian Bureau of Statistics (ABS) on Thursday showed employment escalated by a solid 178,800 in October, after slipping in September.

Economists polled by Reuters were predicting a fall of 30,000 with the employment rate rising to 7.2%.

“This strong increase means that employment in October was only 1.7% below March, and reflects a large flow of people from outside the labor force back into employment,” Bjorn Jarvis, head of Labor Statistics at the ABS, said.

Daily Forecast

Look for the Aussie and Kiwi to continue to retreat throughout session if the “risk-off” tone spreads to the U.S. cash stock market on Thursday’s opening.

Today’s Australian employment data clearly indicates the positive impacts of well-timed fiscal and monetary stimulus from the government and central bank, respectively, however, although the overall jump in the number of jobs created far exceeded expectations, the numbers highlight the challenges for the recession-stricken economy with the unemployment rate widely to peak around 8%, according to economist predictions.

With the Aussie and Kiwi in uptrends, this particular break is likely to be a correction into a value area rather than the start of a prolonged downtrend.

For a look at all of today’s economic events, check out our economic calendar.

Published by

James Hyerczyk

James A. Hyerczyk has worked as a fundamental and technical financial market analyst since 1982. His technical work features the pattern, price and time analysis techniques of W.D. Gann.