Will Positive Australian Jobs Data Push AUD/USD Higher?

For the past three months, the AUD/USD currency pair has been declining on a steady basis. However, that seems to be changing; and for good reason. On Wednesday, the currency pair started to realize strong gains after the Australian jobs report proved to be better than expected. So today, we'll take a look at the Australian jobs report, talk about how its affecting the AUD/USD currency pair, and discuss what we can expect to see moving forward.

The Australian Jobs Report Proves To Be A Hit

The Australian economy has been struggling as a result of the declines we've seen in the commodities market. However, the jobs report for March which was recently released suggests that the country's economy may be making a recovery. In the month of March, economists expected that Australia would add about 10,000 new jobs to its economy. However, the number that was reported in the recently released report proved to be far better. In the month of March, Australia actually added 37,700 new jobs to its economy.

How This Has Affected The AUD/USD Currency Pair

We know that currency pairs move in conjunction with the economies represented by the currencies within the pair. With that said, we're seeing increases in the value of the AUD/USD currency pair as the  Australian dollar edges higher. By 5:00 PM EST, the currency pair had gained 0.0081 points; which is a rather large increase in the currency market. However, the strong jobs report isn't the only reason for the increase…

The USD Is Playing A Major Role In The Movement As Well

When trading currency pairs, it's important to pay attention to both currencies in the pair to get a real gauge of what's coming next. With that said, in this particular case, we know that the Australian dollar is doing incredibly well as a result of the strong jobs report out of the country. However, we also have to take a look at the United States Dollar to get an idea of whether or not the momentum is likely to last. With that said, I think that we are going to see lasting upward momentum in the value of the AUD/USD currency pair.

Throughout the past several years, we've watched as the United States dollar has continuously gained strength. Much of the growth we've seen in this time has been the result of economic stimulus put in place by the United States Federal Reserve. However, that stimulus is coming to an end; and its affecting the United States dollar. We've talked quite a bit about the fact that the Federal Reserve is planning to increase its interest rate by the end of the year. When this happens, the value of the dollar will likely be weighed down. With that said, we've been seeing the dollar decline as economists believe that the Federal Reserve is likely to increase interest rates in September. Therefore, investors are taking early precautions to protect their money; which is driving the value of the United States dollar down.

How Long Are Gains Likely To Last?

In my opinion, what we're looking at here the beginning of long term positive movement on the AUD/USD currency pair. First and foremost, the Australian jobs report proved to be a big hit; which is likely to stay in the minds of investors for some time. Also, considering the fact that the Australian economy is heavily dependent on the value of commodities, the fact that commodities are starting to edge up will likely help to maintain strength in the pair. Finally, the Federal Reserve is likely to raise rates soon; keeping the value of the USD low. Even if the rate isn't raised in September as expected, the over-inflated dollar isn't likely to see much growth any time soon.