Dollar and yen extends recent rise in early US session after release of disappointing Non-Farm Payroll report. NFP showed much worst than expected contraction of -263k in US job market in September, versus consensus of -187k. Unemployment rate, on the other hand, rose to 26 year high of 9.8%. Dollar is particular strong against commodity currencies like Aussie and Canadian while EUR/USD also weakens sharply. Commodities are generally weak with crude oil back below 70 level while Gold dropped through 990 level. Yen crosses also dive sharply on anticipation of lower open in the US stock markets.

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G7 Finance Ministers would probably push for 'strong dollar' on concern that the greenback's slide will impede their recoveries. French FM Lagarde said that everyone needs a strong dollar, and there will be a chance to discuss it in the coming days in Istanbul. The comments are similar to remarks from ECB Trichet made a few days ago. Japanese FM Fujii said he won't discuss the yen's gains at the G7 meeting.

Elsewhere, Eurozone PPI rose 0.4% mom, dropped -7.5% yoy in August. UK Nationwide House Prices show more than expected gain of 0.9% mom in September but PMI construction came in worse than expected at 46.7. Unemployment rate in Japan unexpectedly dropped from 5.7% to 5.5% in August while household spending jumped 2.6% yoy.

Dollar index's break of 77.33 resistance indicates that rebound from 75.83 is resuming. As a short term bottom should at least be formed at 75.83, further rise should be seen towards 78.93 resistance in near term. On the downside, below 77.06 will turn intraday outlook neutral again but favor is still on the upside as long as 76.50 support holds.

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AUD/USD Mid-Day Outlook

Daily Pivots: (S1) 0.8628; (P) 0.8744; (R1) 0.8811; More

AUD/USD's fall from 0.8857 accelerates further today and breaches 0.8585 support in early US session. A short term top should at least be formed at 0.8857 on bearish divergence conditions in 4 hours MACD and RSI. Intraday bias remains on the downside and further decline should now be seen to 0.8154/8468 support zone first. On the upside, above 0.8670 minor resistance will turn intraday outlook neutral and bring recovery. But should turn risk will now remain on the downside as long as 0.8857 holds.

In the bigger picture, as noted before, the strength of the rise from 0.6008 argues that AUD/USD is developing into another up trend. In other words, long term correction from 0.9849 has possibly completed at 0.6008 already, after being support slightly above 76.4% retracement of 0.4773 (01 low) to 0.9849 (08 high). The current rally from 0.6008 might extend further to retest 0.9849 high next.

Sustained trading below medium term rising trend line (now at 0.8557) will indicate that a medium term top is formed. Some deep pull back and lengthy consolidation might then be seen, with prospect of fall to 0.7267/7702 support zone. But a break of 0.7267 resistance turned support is needed to indicate that whole rise from 0.6008 has completed. Otherwise, we'll continue to favor the longer term bullish case even in case of deep correction.

AUD/USD