Forex - AUD/USD weekly outlook: May 11 - 15

Investing.com - The Australian dollar rose against its U.S. counterpart on Friday, as slightly weaker than expected data on U.S. nonfarm payrolls added to speculation that the Federal Reserve may hold off raising interest rates in the immediate future.

AUD/USD tacked on 0.29% on Friday to end at 0.7930. For the week, the pair jumped 1.03%, the fifth straight weekly gain.

The Labor Department reported Friday that the U.S. economy added 223,000 new jobs in April, just below expectations for jobs growth of 224,000. March’s figure was revised down to just 85,000 from a previously reported gain of 126,000.

The unemployment rate fell from 5.5% to a near seven-year low of 5.4% last month, broadly in line with forecasts.

The U.S. dollar initially rallied following the data, before giving back some gains, as traders focused on the negative details of the jobs report.

The dollar index rose to a session peak of 95.17, before trimming gains to settle at 94.91 by late Friday, up 0.18%. On Wednesday, the index slumped to an 11-week low of 93.95.

Recent economic reports have indicated that the U.S. economy has slowed since the start of the year, prompting many investors to push back expectations on the timing of an initial rate hike by the Fed to late-2015, instead of midyear.

Meanwhile, in Australia, the Reserve Bank of Australia cut its outlook for growth and inflation for 2015 and 2016 on Friday, saying the economy will continue to expand at a subpar rate for a longer than expected period.

On Thursday, official data showed that the number of employed people in Australia declined by 2,900 in April, compared to expectations for an increase of 5,000. The report also showed that Australia's unemployment rate rose to 6.2% last month from 6.1% in March.

The tepid data came after the RBA lowered its benchmark interest rate to a record-low 2.00% from 2.25% on Tuesday. RBA Governor Glenn Stevens said the decision came despite some "improved trends in household demand over the past six months and stronger growth in employment" and cited some ongoing weakness in business capital expenditure and public spending.

Elsewhere, China reported a trade surplus of $34.1 billion in April on Friday, below expectations for a surplus of $39.5 billion. Exports slumped 6.4% from a year earlier last month, disappointing expectations for a gain of 2.4%, while imports sank 16.2%, worse than forecasts for a decline of 12.0%.

The slide in imports pointed to persistent weakness in the economy, fuelling speculation policymakers will do more to boost growth.

On Sunday, the People's Bank of China cut its benchmark interest rate by a quarter percentage point to 5.10% from 5.35%, in order to spur economic activity and boost growth.

It was the third rate cut in less than six months, indicating that Beijing is becoming more aggressive in supporting the economy as its momentum slows and deflation risks rise.

The Asian nation is Australia's largest trade partner.

In the week ahead, investors will be focusing on Wednesday's U.S. retail sales report for April, for fresh indications on the strength of the economy and the timing of a U.S. rate increase.

Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.

Monday, May 11

Australia is to release private sector data on business confidence.

Tuesday, May 12

Australia is to publish data on home loans.

Wednesday, May 13

China is to release a string of data, including reports on industrial production, fixed asset investment and retail sales.

The U.S. is to publish data on retail sales.

Thursday, May 14

The U.S. is to publish reports on producer prices and initial jobless claims.

Friday, May 15

The U.S. is to round up the week with reports on industrial production, manufacturing activity in the New York region and consumer sentiment.