Australian Dollar Strengthens Against Majors; September Job Report In Focus

Australian Dollar Strengthens Against Majors; September Job Report In Focus

The Australian dollar edged higher on Wednesday morning in Asia despite a fall in Asia-pacific equities. However, gains were capped by market expectations that the nation's jobless rate would increase in September.

Australia is set to publish its unemployment report for September on Thursday. Economists expect the jobless rate rose to 5.3 percent from 5.1 percent recorded in the previous month, with the participation rate unchanged at 65 percent.

Traders expect the Reserve Bank of Australia will lower interest rate in the next month again to support the labor market. The RBA slashed its key interest rate by 25 basis points to 3.25 percent last week, citing the weaker economic outlook on the back of recent global developments.

At the same time, consumer sentiment in Australia improved in October, according to survey results from Westpac Bank and the Melbourne Institute. The group's consumer sentiment index rose 1.0 percent from September to 99.2 points. The index has been below 100 points for eight straight months.

The aussie rally from the 1.28 support versus the euro gained a substantial shape in the morning, rising above the 1.26 mark for the first time after a gap of a week.

The aussie is expected to extend its advance against the euro until re-testing the 1.2530 area, but a major supply level of 1.30 remain untested in the EUR/AUD pair signals the current rally of aussie may be stalled around the 1.24 area.

The Australian dollar advanced to an 8-day high of 1.2524 against the New Zealand dollar on Wednesday morning in Asia, up 0.33 percent from Tuesday's North American session closing value of 1.2482.

The aussie staged a rebound from its key support zone of 1.2370/1.24 versus the NZ dollar last week and is inching closer to revisit the 1.2550 resistance level in the near-term. However, any bearish triggers could help the pair erase its recent recovery and the eventuality of re-testing the major demand zone of 1.2320/50 is highly likely.

The Australian dollar rose above the parity level against its Canadian counterpart for the first time in 5-days, rising as much as 1.0014, up 0.25 percent from 0.9988 hit late New York Tuesday.

The key demand zone of 0.9960/30 has broken for the commodity currency cross last week and the pair may extend its uptrend in the near-term till hitting the 1.0050 level, its next resistance area. However, a major support zone of 0.9960/40 area remain untested shows the recovery has not yet gained a solid shape.

The Australian dollar touched session's highs of 80.07 against the yen and 1.0232 against the US dollar on Wednesday morning in Asia. However, both the pairs are still trading in a strong descending channel suggest the recent uptrend is just a short-term recovery. Next key levels to watch for the AUD/JPY are 79.40 on the downside and 80.30 on the upside. Important levels for the AUD/USD are 1.0150 on the downside and 1.0250 on the upside.

Looking ahead, Japan's preliminary machine tool orders for September are expected at 2:00 am ET.

German wholesale price index for September, French industrial & manufacturing production for August, Italian industrial production for August are the major economic releases in the European session.

The U.S. Wholesale inventories for August and the Federal Reserve's Beige Book economic survey results could garner market attention in the North American session.