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AUD/USD and NZD/USD Fundamental Daily Forecast – Aussie Rallies Despite Somewhat Disappointing Jobs Data

After getting beat-up early in the session, the Australian Dollar mounted a strong rebound rally that turned the currency higher for the session. The move was likely fueled by short-covering due to oversold technical conditions because today’s employment report was somewhat disappointing.

At 1049 GMT, the AUD/USD is trading .7592, up 0.0004 or +0.06%.

AUDUSD
Daily AUDUSD

According to a government report, Australian employment growth for October came in below expectations. At 3,700, the increase was well below the 17,800 gain that had been expected by economists, and the lowest monthly total since September 2016.

Although the headline number missed, the rest of the report wasn’t that bad because all of the jobs created last month were full-time positions, and total hours worked increased. Additionally, September’s employment gain – originally reported at 19,800 – was also revised higher to 26,600.

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The Unemployment Rate declined to 5.4% from 5.5%, falling to its lowest level since January 2013.

The New Zealand Dollar is trading lower as investors continue to position themselves ahead of Friday’s Business NZ Manufacturing Index, Quarterly PPI Input and Quarterly PPI Output.

NZDUSD
Daily NZDUSD

At 11:03 GMT, the NZD/USD is trading .6849, down .0028 or -0.41%.

In the U.S. on Tuesday, data showed a surprise rise in retail sales last month and an uptick in underlying inflation, solidified the chances for an interest rate hike in December.

The Labor Department said on Wednesday its Consumer Price Index edged up 0.1 percent last month after jumping 0.5 percent in September. Traders were looking for an increase of 0.1 percent in October.

U.S. Retail Sales rose 0.2 percent last month. Economists had expected an unchanged reading.

The price action in the AUD/USD suggests short-sellers may be covering. I don’t expect a change in the trend. This is basically position-squaring designed to alleviate some of the selling pressure and set up the next shorting opportunity.

The direction of both the Aussie and the Kiwi is being dictated by the divergence between the policies of the hawkish U.S. Federal Reserve and the dovish Reserve Banks of Australia and New Zealand.

This article was originally posted on FX Empire

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