Article by AlgosysFx Forex Trading Solutions
The US dollar is deemed to regain strength opposite the Australian dollar on reduced appetites for risk as today’s highly awaited Non-Farm Payrolls report is foreseen to underscore the lingering weakness of the labor sector. Meanwhile, sentiment for the Aussie is presumed to deteriorate further as a gauge of construction shrank the most in twelve months in September.
American employers are believed to have added 114,000 jobs last month, higher than the 96,000 count seen in August but still short of what is considered needed to slash the jobless rate. Indeed, the Unemployment Rate is estimated to edge up from 8.1 percent to 8.2 percent, in part because more Americans likely resumed the hunt for work. Apart from continued uncertainty regarding slowing growth overseas, economists blame the so-called fiscal cliff for the slowdown in hiring. A failure by Congress to avoid automatic tax hikes and government spending cuts is seen to take away about $600 Billion from the economy next year, the Congressional Budget Office warned.
Job growth proved strong at the start of the year, but it began to put on the brakes in March. Job gains averaged around 96,000 from February to August, well below the 125,000 normally needed just maintain the jobless rate steady. Unemployment has remained stuck above 8 percent for more than three years, and the economy is still around 4.7 Million jobs short of where it stood when the 2007-2009 recession started. According to economists, manufacturing payrolls are seen to have been flat in September after posting their first drop in almost a year in August. Employment in construction is also expected to show little improvement. Government payrolls are also projected to have declined for the seventh straight month. The only upside is the recorded jump in automobile sales. With job growth continuing to be lackluster, average hourly earnings are seen to have inclined by only 0.2 percent last month after a stagnant reading in August.
Over to the Land Down Under, the Australian Industry Group reported that its construction performance index contracted last month by the most in 12 months as residential and commercial construction continued to fall. The sector has been contracting for 28 consecutive months, with steep declines in activity, employment and deliveries highlighting its weakness. With the sluggish US labor market and the weak Australian building sector, risk-off trades are believed to take center stage, warranting a short position for the AUD/USD today.
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