AUD/USD: Eyes on Australian jobs report and US CPI

Macroeconomic overview
The Australian dollar held near two-month highs on Wednesday as traders unwound their long positions in the greenback after U.S. president-elect Donald Trump expressed concerns at the currency's strength.
Wednesday's survey of the Melbourne Institute and Westpac Bank found consumer sentiment in Australia edged up just 0.1% in January, failing to recover much from December's 3.4% drop. That left the index at 97.4, a meagre 0.2% higher than in January last year.
The measure of family finances compared to a year ago dropped a sharp 7.6%, but that for family finances over the next 12 months rose 0.3%. Expectations for the economic outlook over the next 12 months bounced 2.5%, but the assessment of economic conditions for the next five years fell 1.4%. One bright spot for retailers was the measure of whether this was a good time to buy major household items which rebounded by 4.9% in January.
Investors will keep a close eye on jobs data for December due on Thursday to take the pulse of the Australian economy, which contracted in the third quarter of last year.
We believe the Australian jobs report should be the highlight of the week for commodity currencies. The AUD has been benefiting from the rise in commodity prices and judging by the uptrend in global manufacturing this is unlikely to change in the foreseeable future.
If the labor market report manages to surprise to the upside this will likely provide an additional boon to the currency. Recently, aggregate job gains have been robust but the most important development has been a notable improvement in the composition of employment with full-time additions being the primary driver. If this trend is corroborated by the figures next week, labor market gains will be regarded as more sustainable.
Investors will be also focused on U.S. events. Fed Chair Janet Yellen's speech later on Wednesday could offer clues about the direction of policy. San Francisco Federal Reserve Bank President John Williams said on Tuesday he saw a "good case" for three rate hikes this year even without fiscal stimulus, but if the economy accelerated, the Fed would need to raise rates faster. Fed Governor Lael Brainard on Tuesday joined the growing chorus of policymakers at the Fed warning that sustained wider budget deficits could fuel inflation.
Investors also awaited the U.S. consumer price index, expected to show inflation at 0.3% last month, compared with 0.2% in November.

Technical analysis
Bull sentiment is upped as the pair powers above the converged 100 and 200-day sma as well as the daily cloud top. RSIs still give bulls momentum with no divergence. A strong support level is 0.7464 (50% fibo of November-December fall).

Trading strategy: GrowthAces.com