- Aussie finds relief after mixed Australian PPI figures.
- Traders vigilant on job data disappointment from the US.
- Markets adjust stance on RBA’s monetary policy, expect cut in 2024.
The Australian Dollar (AUD) has seen a slight recovery against the US Dollar (USD) following disappointing US jobs data. However, economic weaknesses in Australia and the growing expectations of a rate cut by the Reserve Bank of Australia (RBA) are limiting the Aussie’s upside potential.
Despite high inflation, the Australian economy’s sluggish performance has led to a shift in market expectations from a rate hike to a rate cut by the end of the year. Speculation now suggests that the RBA may introduce a cut to address the economic slowdown, which could hinder further gains for the Aussie.
Daily Market Digest: Aussie Gains Ground Despite Increased RBA Cut Odds
- Australia’s Q2 Producer Price Index (PPI) increased by 4.8% YoY, raising concerns for the RBA to take action.
- Market now predicts an 80% chance of an RBA rate cut by year-end, limiting the Aussie’s potential for growth.
- US Nonfarm Payrolls rose by 114K, below the expected 175K, leading to a weaker USD.
- Fed expected to start interest rate reduction in September, with a 90% chance according to CME FedWatch Tool.
AUD/USD Technical Analysis: Bearish Trends Challenged, Room for Corrections
Despite AUD/USD trading below key moving averages, potential support at 0.6480 indicates a possible reversal. Resistance seen at 0.6560-0.6570.
Employment FAQs: Impact on Currency Valuation and Inflation
- Employment conditions influence economic health and currency value.
- Wage growth is crucial for consumer spending and inflation levels.
- Central banks monitor labor market conditions for policy decisions.
Overall, the AUD’s recovery against the USD is influenced by mixed economic data and rate cut expectations. Investors should be cautious of potential market volatility and monitor RBA’s actions closely for future trading decisions.