Fundamental Analysis on AUD/USD September 9, 2013 Forecast...

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The AUD/USD mounted a mild recovery following a sharp sell-off on Thursday. Yesterday’s weakness was fueled by a series of friendly U.S. economic data. The ADP Research institute reported an increase of 176,000 jobs in August. Although this marked the smallest increase since May along with being below the 185,000 estimate, traders used this report as a precursor to today’s U.S. Non-Farm Payrolls report.

Additional pressure on the Aussie was provided by a better-than-expected decline in U.S. Weekly Jobless Claims. This report showed jobless claims dropped by 9,000 the week ended August 31 to a seasonally adjusted 323,000. Economists were calling for a decline to 330,000.

The final blow to the AUD/USD came in the form of a jump in the ISM Services Index. The move from 56.0% to 58.6% suggests U.S. economic growth is picking up steam.
All of these reports could factor into the Fed’s decision later in the month to begin reducing monetary stimulus. However, Friday’s U.S. Non-Farm Payrolls report is expected to have the biggest influence on whether the Fed begins to taper its monthly $85 billion in government bond purchases later this month.
Traders are looking for Non-Farm Payrolls to rise by 180,000 in August and for the unemployment rate to remain at 7.4%. This would be an increase from 162,000 in July. A number above the estimate should set the tone for the month, putting further pressure on the AUD/USD. If the number of jobs added comes in under 160,000, all bets for a Fed tapering will be off the table until at least September 18 when the Fed meets to discuss monetary policy.
The reduction in stimulus should drive U.S. interest rates higher, narrowing the spread between Aussie and U.S. debt. This should make the U.S. Dollar a more attractive investment especially since the Reserve Bank of Australia may cut interest rates one more time before the end of the year.