Author: Sir Amar – Technical Analyst

The Australian dollar is slightly lower against the US dollar this morning despite upbeat economic data. AUD/USD fell more than 1% last week, as the greenback rallied over the weekend after a late-breaking US Non-Farm Payrolls (NFP) report showed more than half a million jobs were added in July, taking the unemployment rate to 3 .6% to 3.5%. The Australian pair’s recent gains could be related to optimism in the options market, despite aggressive betting from the Fed and Sino-US tensions.

However, AUD/USD’s one-month risk reversal (RR) surged as high as 0.055 for the third straight day on Friday, according to Daily Print. Still, the weekly RR appeared to fall for the first time in three weeks. It is worth noting that the RR is the difference between the bullish bets and the bearish bets. Options market participants may have been looking forward to Wednesday’s US Consumer Price Index (CPI) data after witnessing a recent spike in US nonfarm payrolls.

The US dollar index, which measures the greenback against a basket of currencies, extended gains after the report showed nonfarm payrolls rose 528,000 jobs last month, the biggest gain since February. That was well above economists’ expectations. The dollar index, which remains below its mid-July high, rose 0.8% to 106.57. Just before the US release, it was up 0.2%. Department of Labor Employment Report. The index rose 0.6% this week.