• NFP disappointment overrules the other upbeat US reports and weighs on the greenback.
• Market remain cautious with the rising cases of coronavirus in Australia.
• Fed Powell’s hawkish comments and rising US inflation might recoup the Friday US dollar losses.

The Australian dollar trades high the US dollar on Monday Asian session since US dollar took a step back despite of the rapid spread of covid cases in Australia complicates the economic outlook and the interest rate.

The US dollar came in to sell off on Friday with the disappointing US NFP report despite the rest of the report was strong enough to see markets actually narrow the odds on a March hike from the Federal Reserve.

The headline Nonfarm Payrolls (NFP) report did not meet the expectation of 400k forecasts and recorded 199k However, the Unemployment Rate had a drop with 3.9% vs expectation of 4.1% and 4.2% in November and the U6 Underemployment Rate dropped to 7.3% against November’s downwardly revised 7.7%, and both closed in the pre-pandemic levels. The Unemployment Rate and U6 Underemployment Rate did not favor the US dollar due to NFP-led disappointment.

Elsewhere, Market is priced at a June rate rise from the Reserve Bank of Australia (RBA), despite the central bank has long argued that a move was unlikely until at least 2023.

On the other hand, market becomes cautious by the explosion in coronavirus cases in Australia to 100,000-plus a day, compared to just a couple of thousand a month ago. The virus had pushed Queensland to delay the yearly school reopening by a month to early February.  Virus conditions are getting worst all over the world even as policymakers cite scientific studies to remain hopeful. On the positive note, Australia begins vaccinations for 05-12 years children from Monday.

Federal Reserve chair Jerome Powell and governor Lael Brainard are about to testify before Senate committees this week regarding their nominations as chair and deputy chair at the Fed. U.S. inflation figures are due on Wednesday, with headline CPI seen climbing to a red-hot 7% year-on-year. The dollar might recoup with the Friday losses with hawkish Fed chair commentary and US inflation figure.

AUD/USD 4 Hour Chart:

Support: 0.7143 (S1), 0.7107 (S2), 0.7085 (S3).

Resistance: 0.7201 (R1), 0.7223 (R2), 0.7259 (R3).

The US dollar’s step back due to disappointing NFP data underpins the AUD/USD uptrend. We expect a bullish trend for AUD/USD.