• AUD/USD ends 0.11% higher
  • Fewer new jobs in US driving down dollar index
  • Minutes of Fed meeting could cause market volatility

The AUD/USD currency pair reached a new session high yesterday when it hit 0.7408. However, it could not sustain that high as strong PMI statistics from the US boosted demand for that currency. At the time of this writing, the AUD/GBP rate was 0.11% higher at 0.7393.

Earlier yesterday, initial reports from the US indicated that around 177,000 new jobs were added in the private sector last month. This fell short of the 190,000 expected by the market.

Markets initially responded to these figures by driving the US dollar index to below 94, a new 10-day low. The next set of statistics, however, revealed that service sector business activity in that country grew faster than most analysts expected, with both Markit’s PMI and ISM coming in above initial estimates.

The DXY traded at 94.05 at one point, a loss of 0.15% for the day.

Investors will try to find hidden clues in the minutes of the Fed’s June meeting about the chances of another 25-basis-point rate increase in September. The CME Group Fedwatch tool indicates that markets have already priced in a 77.7% likelihood that rates will increase in September.

If the FOMC statement turns out to be rather hawkish, it could increase the likelihood of this happening and enable the dollar index to recover some of its earlier losses.

The currency pair could encounter technical resistance when it reaches 0.7410, the 20-day moving average/daily high. After that is 0.7445, the lowest level for June, and 0.7500 – a psychologically important level.

If the rate starts to drop, the first support level is at 0.7360, which is the daily low. After that comes 0.7310, a psychological level and also the July 2 low, and finally the low reached on December 19, 2016, of 0.7240.

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