AUD/USD drops to daily lows near 0.7160, erases majority of weekly gains
- AUD/USD pair is down nearly 1% on Friday.
- Broad-based USD strength in American session dragged AUD/USD lower.
- Nonfarm Payrolls in the US rose more than expected in July.
The AUD/USD pair spent the first half of the day fluctuating in a relatively tight range above 0.7200 but lost its traction during the American session. As of writing, the pair was down 0.99% on a daily basis at 0.7161. On a weekly basis, the pair is still up around 20 pips.
DXY looks to end the week on a strong footing
The fresh USD-buying wave witnessed in the second half of the day forced AUD/USD to push lower. The data published by the US Bureau of Labor Statistics showed that Nonfarm Payrolls (NFP) in the US rose by 1,763,000 in July and beat the market expectation of 1,600,000. Further details of the report revealed that the Unemployment Rate dropped from 11.1% to 10.2%.
Commenting on the NFP report, “across the private sector, job growth eased up broadly, but most major industries continued to chip away at earlier job losses," said Wells Fargo analysts. "That suggests a broader hit to employment beyond the industries most immediately impacted by social distancing efforts has not manifested in a material way, at least not yet.”
Although the initial market reaction to the jobs report brought the US Dollar Index (DXY) down to 93.00, the cautious market mood provided a boost ahead of the weekend. With investors waiting for US lawmakers to come to an agreement on the next coronavirus bill and US-China tensions remaining elevated, the DXY advanced to its highest level in three days at 93.62. At the moment, the index seems to have gone into a consolidation phase near 93.50, where it's still up more than 0.7% on a daily basis.
Technical levels to watch for