AUD/USD loses ground ahead of US non-farm payrolls report

Australian dollar traded lower against its US counterpart on Friday ahead of the release of the non-farm payrolls report out of the United States later in the day and following the upward revision of the US Gross Domestic Product, reported on Thursday.

AUD/USD slipped to a session low at 0.9036 at 1:04 GMT, after which consolidation followed at 0.9050, down 0.14% for the day. Support was likely to be received at December 5th low, 0.9004, while resistance was to be met at December 5th high, 0.9076.

Earlier on Friday the Australian Industry Group (AIG) said that its Performance of Construction Index (PCI) improved for a second month in a row, reaching a reading of 55.2 in November, as the main contributor to this result has been the sub-index of new orders. The latter climbed to 58.5 in November, marking its highest level since January 2006. The PCI came in at 54.4 in October, which was the first reading in the zone, pointing expansion since May 2010. Values above the key level of 50.0 are considered as an indication that activity in the sector has increased.

The performance, demonstrated by the PCI during the past two months, came as evidence that Reserve Bank of Australias interest rate cuts since late 2011 have begun favoring economic recovery in the country.

“The fact that growth was reported in each of the four sub-sectors is particularly encouraging and adds to the signs that the long-awaited re-balancing of the domestic economy may be getting underway on the back of low interest rates and a lift in business and household confidence”, AI Groups director of public policy Peter Burn said, cited by Investing.com.

This report came out one day after the Australian statistics bureau reported that nations trade balance registered a wider deficit than projected in October. The figure reached 0.529 billion AUD in October, which marked a 22nd consecutive month with a deficit, from a revised up deficit of 0.271 billion AUD in the preceding month, while analysts had expected a deficit at the amount of 0.375 billion AUD.

In October Australian exports dipped 0.1%, while imports climbed 0.8%. The export figure decreased mostly due to a weaker export of farming goods and of services. At the same time, import of products used in manufacturing and import of consumer goods rose. Exports towards China, however, increased 6.8% in October compared to a month ago, after in September it fell 1.6%.

In addition, Australia’s Gross Domestic Product grew at a lesser than expected pace during the third quarter of the year compared to the preceding quarter. The GDP figure rose 0.6% in Q3, following a revised up 0.7% growth in Q2, while preliminary estimates pointed a 0.7% gain in the third quarter.

Meanwhile, it became clear that United States Gross Domestic Product expanded at an annualized rate of 3.6% during the third quarter of the year, or the fastest pace since the first quarter of 2012, following a preliminary result, pointing a 2.8% growth. The major factor behind this figure have been the amassed inventories, as some experts suggest that such a performance of nations GDP might be temporary.

The Labor Department released its weekly report also yesterday, which showed that the number of initial jobless claims in the United States decreased by 23 000 to reach 298 000 during the week ending on November 30th 2013. Experts had expected that this number will increase to 323 000, compared to the initially reported 316 000 claims in the preceding week.

“Strong numbers again coming out of the U.S. puts further weight on talks of a December taper,” Gary Yau, a research associate at Credit Agricole CIB in Hong Kong, wrote in a note to clients on Friday, cited by Bloomberg news. “We continue to see a mood of caution and consolidation ahead of the all important U.S. jobs report.”

However, analysts at Barclays warned that such a considerable accumulation of inventories amid quite a mediocre increase in consumer spending in the United States would not influence in a positive manner Federal Reserves estimate regarding economic development. Domestic demand and especially consumer expenditures serve as key components of nations GDP.

Elsewhere, the Aussie was steady against the euro, with EUR/AUD cross ticking up a mere 0.03% on a daily basis to trade at 1.5090 at 8:22 GMT. AUD/NZD pair was advancing 0.33% to trade at 1.1066 at 8:24 GMT.