AUD/USD hits fresh daily high post-NFP, lacks follow-through beyond mid-0.6800s

• AUD/USD adds to intraday recovery gains and refreshes daily high in reaction to mixed US jobs report.
• The US economy added 312K jobs in August and the unemployment rate unexpectedly rose to 3.7%.
• Hawkish Fed expectations should help limit any meaningful USD downside and cap gains for the pair.

The AUD/USD pair extends its recovery move through the early North American session and jumps to a fresh daily high, around mid-0.6800s in reaction to the mixed US jobs report.

The headline NFP print showed that the US economy added 312K jobs in August against the 300K anticipated, though the reading was well below the 526K reported in the previous month. Adding to this, the unemployment rate unexpectedly rose to 3.7% from the 3.5% previous. Furthermore, softer-than-estimated Average Hourly Earnings drag the US dollar away from a two-decade high touched the previous day. This is seen as a key factor that provides a modest lift to the AUD/USD pair.

Spot prices have now reversed the overnight losses to the lowest level since July 18, though any further recovery still seems elusive. Despite a slight disappointment from the US employment details, growing acceptance that the Fed will stick to its aggressive policy tightening path might continue to act as a tailwind for the USD. Apart from this, concerns about a deeper global economic downturn might further contribute to capping the upside for the AUD/USD pair, at least for now.

Even from a technical perspective, the intraday positive move stalls near the 100-hour SMA, currently around mid-0.6800s, which should now act as a pivotal point for intraday traders. This makes it prudent to wait for strong follow-through buying before confirming that the AUD/USD pair has formed a near-term bottom and positioning for any further appreciating move.

Technical levels to watch