AUD/USD traders get set for a busy week.
The RBA, NFP and Fed chair will be the main focus.
The Australian dollar is taking its cues from sentiment surrounding the Federal Reserve, robust US data, local economic data and while also looking to China's upcoming parliament meeting for new economic support.
The Aussie is correcting higher and away from the January low of 0.6689 in the footsteps of the return of risk appetite. Markets got a boost last week on the back of comments by Atlanta Fed President Raphael Bostic. The central banker said on Thursday that the impact of higher US interest rates on the economy may only begin to "bite" in earnest this spring. Earlier that day, US data, however, pointed to a still strong U.S. jobs market ahead of this week's Nonfarm Payrolls and Federal Reserve chairman Jerome Powell's testimony.
A number of regional Fed Presidents have expressed their openness to increasing the amplitude of rate hikes from 25bp to 50bp if the data warrants so markets will be looking to Powell for confirmation and a hint of a bias this week one way or another.
''Powell may be questioned on this at his testimony; if so he is likely to reiterate that the absolute level of rates is ultimately what matters,'' analysts at ANZ Bank said. ''The text of the semi-annual report was released on Friday and noted that further interest rate rises will be appropriate and that a period of below-trend growth may be needed to get inflation back to 2.0%.''
However, the analysts also argued that ''the recent jobs and inflation data do not support arguments that interest rates are restrictive and it will be important to scrutinize the next round of hard data, starting with non-farm payrolls this Friday. ''
Analysts at TD Securities said that ''US payrolls likely mean-reverted to a still firm pace in Feb after an unexpected 517k surge in Jan. We also look for the Unemployment Rate rate to stay unchanged at 3.4%, and wage growth to print a strong 0.4% MoM.'' It is worth noting that the range of economists’ estimates is 100-325k.
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