The Employment Change released by Automatic Data Processing, Inc showed that generally speaking, the US economy added 497K newly employed people in June, exceeding by far the expectations of 228K and accelerating from its previous figure of 278K. On the other hand, Initial Jobless Claims for the week ending in June 30, increased as expected but came in slightly higher than the consensus at 248K vs the 245K expected. Other data showed that ISM Services PMI came in at 53.
As a reaction, US Treasury yields soared across the board following the data. The 2-year bond yield led the way, jumping to its highest level since 2007 at 5.08%. The 5 and 10-yearalso increased to 4.40% and 4.03%, respectively, showing more than 2.50% increases. Focus will now shift to Friday’s Non-Farm Payrolls , expected to drop 225K from the previous 339K. In that sense, the outcome could provide further volatility in the bond market and the AUD/USD price dynamics.
It's worth mentioning that FOMC minutes revealed that some members considered appropriate hiking as a tight labor market would contribute to high inflation. That being said, a 25 basis point hike in July is priced in, while the odds of an additional hike stand around 40%.According to the daily chart, the AUD/USD appears to be bearish in the short term.
In case of more downside, support levels are seen at 0.6600, 0.6585 and 0.6550. On the flip side, the mentioned 0.6700 stands as the main resistance to recover for the bull with next targets at 0.6730 and 0.6750.