Dollar treads water ahead of US jobs

The local unit was treading water in late trade, as markets held their breath for clues on Fed policy.

The Australian dollar barely moved in the local session on Friday.

The Australian dollar has edged lower as financial markets wait on crucial US employment numbers that will shape the interest rate outlook in the world’s largest economy.

At 5.30pm (AEST) on Friday, the local unit was trading at US75.44 cents, down from US75.52c on Thursday.

The currency rallied overnight after the greenback dipped on US manufacturing data that showed the sector contracted for the first time in six months in August.

But the Australia dollar barely moved in the local session as traders and investors hold their breath ahead of the release of the US jobs numbers later on Friday, chief market strategist at easyMarkets Anthony Darvall said.

“The announcement tonight will dictate whether the Federal Reserve will lift rates in September,” he said.

“The consensus is for 180,000 (new jobs). Anything above that would increase the chances of a September rate hike and that would lead to US dollar strength.”

If the payroll numbers come in below the forecast then the reverse is likely to happen, which could cause the Australian dollar to bounce to US76 cents.

AAP