Employment data should keep the AUD offer on crosses – ING

Australia’s strong July employment data may prove a headache for the Reserve Bank of Australia. Strong growth in full-time employment appears to be delaying the RBA from falling into a state of total easing, as already seen in New Zealand and likely to be seen by the Fed in September, notes Chris Turner, FX strategist at ING.

One month target is 0.68 for AUD/USD

“This should imply that the Australian dollar (AUD) is doing well on the crosses. The early August decline in AUD/NZD suggests that investors liked this cross to trade higher, but the yen-triggered deleveraging forced a rebound. We can now see this cross retesting the mid-July highs of 1.1150.”

“Equally, if the Fed tapers in September and the US yield curve slopes further, EUR/AUD should decline. But macroeconomic weakness in China is likely to hold the AUD back here. Overall, a one-month target is 0.68 for AUD/USD.”