Home Forex Market Analysis AUD/USD Retreats Ahead of NFP as Oil Prices and Bitcoin Edge Higher

AUD/USD Retreats Ahead of NFP as Oil Prices and Bitcoin Edge Higher

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AUD/USD Retreats Ahead of NFP as Oil Prices and Bitcoin Edge Higher
  • The Australian dollar is losing ground against the dollar ahead of the NFP report on Friday.
  • Oil prices are edging higher Brent, having powered through $70 a barrel on easing supply concerns and improving demand outlook.
  • US equities are also under pressure, with major indices retreating from all-time highs amid inflationary concerns.
  • Cryptocurrency bounce back after a steep pullback continues to gather steam as a major crypto conference continues in Miami.

The AUD/USD is under immense pressure heading into a major economic release on Friday. The pair have struggled for direction in recent days, with traders shrugging positive economic data from Australia. 

A confirmation that Retail Sales in April increased by 1.1% failed to positively impact the AUD, which remains under pressure even considering the US dollar’s weakness across the board.

With the AUD/USD hitting a strong resistance at 0.7770, sentiments are increasingly looking bearish, with the pair edging lower ahead of the US Nonfarm payroll report on Friday.

AUD/USD chart

The 0.7710 is the immediate support level to the downside, a breach of which could trigger increased sell-off to the 0.7670 level, the next substantial support level.

In the absence of significant fundamental drivers in Australia, the focus is on the U.S. The greenback is showing signs of bouncing back after coming under pressure in recent weeks. A bounce back to the 90 level will likely fuel further sell-offs in the AUD/USD pair.

The outcome of the ADP private-sector employment report and ISM Services PMI data could significantly impact the greenback. However, the Non-Farm Payroll report on Friday is likely to trigger wild swings on the pair.

GBP/JPY price action

A well-supported British pound across the board continues to pile pressure on the Japanese yen under immense pressure. The GBP/JPY is on the cusp of rallying to multi-year highs amid a sudden pickup in pound demand.

After a recent correction lower, the 156 level is in sight as bullish momentum gathers steam on GBP/JPY.

GBP/JPY chart

Upbeat U.K. economic recovery on the easing of lockdown restriction is one of the factors fuelling GBP demand. Hints that the Bank of England could raise interest rates next year also offer support to the pound, fuelling the rally in the GBP/JPY pair.

Oil above $70

In the commodities market, oil is looking increasingly bullish amid solid demand and fading supply concerns. Prices are little changed on Thursday after a spike on Wednesday. Brent crude is already above the $70 a barrel level after touching the highest level since September 2018 of $71.99 a barrel.

US West Texas oil price chart

US West Texas oil is closing in on the $70 barrel level after a 0.12% spike to $68.91 a barrel. Fuelling the spike in oil price is growing optimism among OPEC nations and allies that demand will continue to outpace supply in the second half of the year.

US equities under pressure

In the equity markets, major US indices are struggling to hold on to gains near all-time highs. The Dow was up by 25 points to close at 34,600 as the NASDAQ ended the day up 0.14%.

S&P 500 index

However, early Thursday morning, futures for the Dow Jones Industrial Average were down 210 points as S&P 500 futures slipped 0.7% and NASDAQ futures fell by 0.9%. The slip came as investors remain fixated on labor market reports that could help provide hints on the inflation trajectory. Fears that labor shortage could fuel inflationary pressure forcing the Fed to hike interest rates have weighed heavily on equities.

Cryptocurrency bounce back

In the cryptocurrency market, Dogecoin is leading the recovery in the overall market. Bitcoin, which is down by more than 20% from all-time highs, has turned bullish in recent days after finding support above the $30,000 level.

The flagship cryptocurrency is closing in on the $40,000 level after a 4% plus surge on Thursday.

BTC/USD chart

Dogecoin is up by more than 20% since the start of the week, with Ethereum bounce back also gaining momentum. The upward momentum comes when Miami is hosting one of the largest ever cryptocurrency conferences affirming cryptos are not fads but on course to go mainstream.

Cryptocurrencies should be the center of attention as Google is poised to let advertisements appear side by side with crypto exchanges and digital wallets targeting US consumers starting August.

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