Risk confidence continues to factor in further losses for the US dollar against its Australian currency counterpart. The resolution signed into a bill by President Barack Obama took out the uncertainty in the markets as to whether the world’s largest economy would fall over the fiscal cliff and cause an economic disaster. Hopes of a steady economic revival in China are also pushing in gains for the Aussie today.
The agreement boosts taxes on the wealthiest Americans, while preserving tax cuts for most American households. While effectively averting a looming fiscal cliff that had threatened to plunge the nation back into recession, the bill also extends expiring jobless benefits, prevents cuts in Medicare reimbursements to doctors and delays for two months billions of dollars in across-the-board spending cuts in defense and domestic programs.
Further adding to the market’s risk sentiment are the US labor market data scheduled for release today. After a lackluster 118,000 release for the month of November, December ADP Non-Farm Employment Change is estimated to reach 134,000. Also, the labor department is anticipated to post a fourth straight week of Jobless Claims with less than 365,000 filings. Analysts key in a 356,000 figure for the last week of 2012, which could bring the December average to less than 353,000.
Also, after a gauge of China’s manufacturing showed a third month of expansion, data from China earlier today showed that the services sectors likewise expanded in December. This further adds evidence that the recovery in the world’s second-biggest economy will extend into the new year, positively affecting the currency of its trade partner from the Land Down Under.
A long position is recommended for the AUDUSD in light of the market optimism. Still, be on the watch for likely technical price corrections as the currency pair is already trading near the overbought territory.
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