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AUD/USD consolidates gains above 0.6500 as focus shifts to NFP

  • AUD gathers strength despite RBA’s dismal growth outlook.
  • Upbeat market mood helps the pair reserve its gains on Friday.
  • USD stays relatively calm ahead of critical April NFP data.

The AUD/USD pair gained nearly 100 pips on Thursday boosted by the upbeat Trade Balance data from both China and Australia. Despite the Reserve Bank of Australia’s (RBA) cautious outlook, the pair extended its rally and advanced to a fresh weekly high of 0.6548 on Friday before going into a consolidation phase. As of writing, the pair was up 0.45% on the day at 0.6524.

In its May Statement on Monetary Policy, the RBA said it expects the economy to contract by 6% in 2020. However, “given the relatively rapid decline in the number of new COVID-19 cases in Australia, it is possible to contemplate an upside scenario,” the bank noted to help the AUD gather strength. According to this scenario, most domestic restrictions on activity are expected to relax a little sooner.

Focus shifts to US NFP data

Later in the day, investors will be keeping a close eye on the April jobs report from the US. Ahead of this data, the US Dollar Index is posting small daily losses at 99.75.

Previewing the data, “we expect Nonfarm payrolls to show a historical drop in employment of 25 million (which is slightly more than the 21 million consensus) and a rise in the unemployment rate to 15-20%,” said Danske Bank analysts.

 US NFP Preview: 9 Major Banks expectations for April payrolls report.

Technical levels to watch for

 

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