AUD /USD Oct 08-2012

Fridays non-farm payrolls was close to expectations but a drop in the unemployment rate raised eyebrows. The Australian dollar slumped badly while CAD rallied on strong Canadian jobs data. Weekly CFTC positioning data showed aussie bulls bailing. 1 of 2 EUR longs hit all targets. Rest of detail is below.

Payrolls increased 114K compared to 115K expected. The prior numbers were revised higher but it was entirely due to government jobs, not private hiring that would signal an economic pickup.

But the significance of the underlying numbers was completely overshadowed by political insinuations related to an unexpected fall in the unemployment rate to 7.8%. That set off calls of a conspiracy as the campaign (mercifully) enters its final month.

The US dollar and yen initially slumped on the jobs data, sending the euro to a two-week high of 1.3072. Later, risk trades receded and EUR/USD wrapped up the week at 1.3031.

The Canadian dollar benefitted from 52.1K new jobs in September, most in the full-time space. That easily beat the +10K estimate, sending USD/CAD as low as 0.9735.

The big mover to close out the week was the Australian dollar. The aussie cascaded lower despite the positive risk sentiment early in the session and continued lower as sentiment worsened. AUD/USD fell as low as 1.0152, losing a full cent after NFP.

Speculation about the Spanish and Greek bailouts continue with no progress or news on either front.

AUD/USD intraday: the downside prevails.

Pivot: 1.0235 Our preference: Short positions below 1.0235 with targets @ 1.012 & 1.008 in extension. Alternative scenario: Above 1.0235 look for further upside with 1.0275 & 1.032 as targets. Comment: as long as 1.0235 is resistance, likely decline to 1.012.

CFTC Commitments of Traders (as of Tuesdays close)

EUR net - 50K vs -50K prior

JPY net +29K vs +21K prior

GBP +long 30K vs +27K prior

AUD +long 64K vs +90K prior

CAD +long 101K vs +105K prior

NZD +long 21K vs+20K prior

Although the Australian dollar position was scaled back heavily, longs were generally at parity and above and will be vulnerable to a further decline in the week ahead.


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