• AUD/USD falls sharply by more than 100 pips on US economic data.
• The US Nonfarm Payrolls report almost tripled the market’s expectations for job creation.
• US ISM Non-Manufacturing PMI is back at expansionary territory.

AUD/USD collapsed after US economic data revealed on Friday showed that the labor market remains tight, and it would keep the US Federal Reserve under pressure to bring down inflation to the 2% target. That, alongside the US Dollar paring WEdneadys losses on Thursday, are the reasons for today’s price action. At the time of writing, the AUD/USD exchanges hands at around 0.6970s.

US jobs data surprised investors, as further Fed action is expected

Wall Street opened the last trading session of the week with losses. The US Department of Labor (DoL) revealed January’s data that surprised investors, with Nonfarm Payrolls data smashing expectations as the economy created 517K jobs in the economy, exceeding estimates for the creation of just 200K jobs. Consequently, the Unemployment Rate fell to 3.4% from 3.5%, while December’s figures were revised upward.

Average Hourly Earnings, sought by the US Federal Reserve as a measure of wages inflation, linked to last week’s Employment Cost Index (ECI), came at 0.3% MoM, in line with forecasts but lower than December’s report.

All that said, the AUD/USD extended its losses, but not without putting a fight around the 0.7000 psychological barrier. Once it gave way, the AUD/USD dropped below the 20-day Exponential Moving Average (EMA) at 0.6992 ad so far is eyeing the confluence of the January 19 daily low and the 50-day EMA at 0.6871.

In the bond market, US Treasury bond yields, mainly the 10-year benchmark note rate, climbed 14.5 bps to 3.54% after falling towards a monthly low of 3.334% on Thursday.

Of late, the US economic calendar revealed that S&P Global PMIs came slightly above estimates. Meanwhile, the ISM Non-Manufacturing PMI Index, which reports the behavior of the services economy, is back above in expansionary territory, rose to 55.2 from 50.4 estimates and way above December’s 49.2

AUD/USD Key Technical Levels