AUD/USD: bears back in control and break key support 0.7520

Currently, AUD/USD is trading at 0.7525, down -0.08% on the day, having posted a daily high at 0.7535 and low at 0.7518.

Forex today: ADP report nails dollar down, oil breaks below $50.00

AUD/USD has continued with its bearish decline and broken the consolidative phase within the trend as the dollar advances across the board. The ADP report was the catalyst for further upside in the greenback overnight and the market is basing the foundations of a March Fed hike on the back of the report as a prelude to Friday's nonfarm payrolls. 

What markets will also be looking for within the report is an improvement in the unemployment rate and wages as critical components that the Fed will use to assess whether indeed there are the foundations for tighter money in the economy. Januarys report saw an increase in the unemployment rate and a miss in wages. "Average earnings were supposed to rise by 0.3% in Jan but only rose by 0.1%.

At the same time, Dec was revised down from 0.4% to only a rise of 0.2%. So, if you combine the previous two months, wages actually rose 0.4% lower than what Wall Street was looking for." - Just a reason or two to short the 'March rate hike herd'. For the day ahead we have China CPI and PPI for Feb. The median estimate for CPI being 1.7% yoy.

AUD/USD 1-3 month:

Analysts at Westpac explained that they see the Aussie lower to 0.7400: "The Fed’s assertive tightening bias plus US fiscal expansion should maintain upside pressure on US interest rates and the US dollar. Against that coal and iron ore are likely to sustain a good portion of their dramatic rises, and economic data for Q4 and Q1 should improve, but these forces are subservient to the US dollar’s trend. Australia’s AAA rating will remain an issue into the May budget. (23 Dec)."

AUD/USD levels

This break of 0.7520 opens 0.7450 (the 38.2% and 50% retracements). On the upside,  0.7632 was the recent high while the 20-d sma is located at 0.7648 today and marks a tough resistance zone ahead of the YTD highs at 0.7740. Towards the end of the year, the market was failing ahead of 0.7778/.7850 2016 highs and the 38.2% retracement.