AUD/USD retreats below 0.7400 as USD gathers strength ahead of NFP
- AUD/USD failed to preserve its bullish momentum after closing higher on Thursday.
- US Dollar Index continues to push higher during the European session.
- Nonfarm Payrolls in US is expected to rise by 870,000 in July.
The AUD/USD pair registered small daily gains on Thursday but lost its traction on Friday. As of writing, the pair was down 0.21% on a daily basis at 0.7389.
DXY edges higher, eyes on NFP
The upbeat market mood helped the AUD find demand on Thursday. However, the renewed USD strength forced the pair to reverse its direction. Ahead of the US Bureau of Labor Statistics' highly-anticipated July labour market report, the US Dollar Index is trading at its highest level in more than a week at 92.42, rising 0.18% on a daily basis.
Nonfarm Payrolls (NFP) in the US is expected to increase by 870,000 in July. However, the negative impact of the disappointing ADP Employment Change reading was short-lived earlier in the week with investors pricing the possibility of the Fed reducing asset purchases before the end of the year. Unless the NFP print is a huge disappointment, the greenback could continue to outperform its rivals in the second half of the day.
NFP Preview: Forecasts from seven major banks for July jobs report, estimates vary more than usual.
In the meantime, Reserve Bank of Australia Governor Philip Lowe adopted an optimistic tone with regard to economic outlook but failed to help the AUD gather strength. Lowe noted that the economy has recovered quicker than expected and added they expect wage inflation and core inflation to remain subdued.
Technical levels to watch for