FX News – Feb 7 2014: AUD/USD Slides Sharply Ahead of US NFP

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After a steady performance between the 0.8940-0.8980 areas yesterday, the AUD/USD pair took a surprise dive earlier today, with no apparent trigger for the move.

Earlier, the Reserve Bank of Australia (RBA) released its statement of monetary policy. There was no new information provided there, however, at least in terms of what the Bank already said on Tuesday in its statement on cash rates.

In today's statement, the RBA upgraded its inflation and growth projections. By June this year, they expect Australia's GDP to be at 2.75% instead of the earlier 2.5%. Meanwhile, they also revised their inflation projection to 3%.

With no clear trigger for the sudden decline in the AUD/USD pair, the only probable reason for it is the market's anticipation of the NFP data to be released by the US later today (1:30PM, GMT).

From a high near the 0.8980 area yesterday, the pair took a sharp slide just above the 0.8920 zone. It is currently trading at 0.8932, with initial resistance seen at 0.9008, followed by 0.9031. Meanwhile, initial support is at 0.8934, followed by 0.8911.

In contrast to the AUD/USD pair's performance, the EUR/USD pair remained relatively steady ahead of the US NFP data. The pair has been hovering between the 1.3585-1.3618 areas after a sharp rise during yesterday's European session, although a movement will be expected during the US event later today.

Yesterday, the EUR/USD pair took a quick rise from the 1.3500 area to near 1.3620 after European Central Bank (ECB) President Mario Draghi announced no changes to the Eurozone's interest rate, which remains at 0.25%. Rather, the ECB will monitor the market closely and take action only when necessary.

The pair is currently trading at 1.3589, with initial resistance seen at 1.3675, followed by 1.3709. Meanwhile, initial support is at 1.3537, followed by 1.3503.

By FX Strategy Team, Published on 7th of February 2014
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