AUD unable to extend break back above US$0.66 as attentions turn to US labour data

Daily Currency Update

The Australian dollar continues to trade below US$0.66, unable to hold onto overnight gains despite a broadly weaker US dollar. Having tracked sideways for much of the domestic session, the AUD climbed off intraday lows below US$0.6580 extending back through US$0.66 to touch US$0.6635. Weaker than anticipated US labour market data prompted a correction in 2-and-10-year treasury yields and fostered a US dollar downturn. Despite the weaker dollar the AUD was unable to consolidate the rally, sliding through the last hours of overnight trade to open this morning at US$0.6581. With momentum firmly behind the dollar, markets appear wary in extending AUD gains ahead of tonight’s all-important US non-farm payroll print. With some signs labour market activity is slowing, payroll data will prove critical in determining near term direction. Another robust read will amplify calls for the Fed to accelerate the pace of rate hikes and firm expectations the Fed will lift rates by 50 basis points later this month. With the AUD clinging to supports at US$0.6580 another blockbuster US print could see the AUD extend its recent downturn.