Investing.com - The Australian dollar fell to a five-week low against its U.S. counterpart on Friday, before turning modestly higher as market players digested a report showing that the U.S. economy added more jobs than expected last month, but also revealed weaker earnings growth and a drop in labor force participation.
AUD/USD fell to 0.9203 on Friday, the pair’s lowest since March 26, before erasing losses to subsequently consolidate at 0.9277 by close of trade, up 0.04% for the day and 0.08% higher for the week.
The pair is likely to find support at 0.9203, the low from May 2 and resistance at 0.9311, the high from May 1.
The U.S. dollar strengthened after the Labor Department reported Friday that the U.S. economy added 288,000 jobs in April, well above expectations for jobs growth of 210,000. The U.S. unemployment rate dropped to a five-and-a-half year low of 6.3%, compared to expectations for 6.6%.
But the greenback quickly gave back gains after the report also showed that the labor force participation rate, which measures the proportion of people either working or looking for work, fell to 62.8% from 63.2% in March. Meanwhile, average wage growth edged lower in April from the same month a year earlier, dampening the medium term inflation outlook.
In Australia, official data released Friday showed that producer price inflation rose 0.9% in the first quarter, more than the expected 0.6% gain, after a 0.2% uptick in the three months to December.
Meanwhile, heightened tensions between Moscow and the West remained in focus as Ukraine's army and pro-Russian rebels continued to skirmish on Friday, stoking fears that the crisis will develop and drag the U.S. deeper into the standoff.
The United Nation’s Security Council met about Ukraine on Friday in an emergency session, while U.S. President Barack Obama threatened to slap fresh sanctions on Russia if Moscow disrupts Ukrainian elections scheduled for May 25.
The West is accusing Russia of leading a separatist revolt in eastern Ukraine after it annexed Crimea last month.
Data from the Commodities Futures Trading Commission released Friday showed that speculators decreased their bullish bets on the Australian dollar in the week ending April 29.
Net longs totaled 10,706 contracts, compared to net longs of 16,370 in the preceding week.
In the week ahead, investors will be looking ahead to Monday’s report on U.S. service sector activity and Wednesday’s testimony by Fed Chair Janet Yellen on monetary policy and the economy.
Tuesday’s rate decision by the Reserve Bank of Australia will also be in focus, as well as highly-anticipated Australian employment data due Thursday.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, May 5
Australia is to produce data on building approvals, while China is to publish the final reading of its HSBC manufacturing index for April.
In the U.S., the Institute of Supply Management is to publish a report on service sector activity.
Tuesday, May 6
The RBA is to announce its benchmark interest rate and publish its monetary policy statement, which outlines economic conditions and the factors affecting the bank’s decision. Australia is also to publish data on the trade balance.
The U.S. is to release data on its trade balance.
Wednesday, May 7
Australia is to produce a report on retail sales.
Later Wednesday, Fed Chair Janet Yellen is to testify before the Joint Economic Committee of Congress, in Washington.
Thursday, May 8
Australia is to release data on the change in the number of people employed and the unemployment rate.
The U.S. is to publish the weekly report on initial jobless claims.
Friday, May 9
The RBA is to publish its monetary policy statement. Meanwhile, China is to produce a report on consumer price inflation.