The AUD/USD Pair Surges on Stellar Australian Jobs Data
- AUD/USD stages a goodish recovery from the YTD low on stellar Australian jobs data.
- Investors scaled back their expectations for an early RBA rate cut, which lifts the AUD.
- Bets for another Fed rate cut in December cap the USD and further support the major.
The AUD/USD pair has experienced a significant uptrend following the release of positive Australian employment data, distancing itself from the year-to-date low reached previously. The Australian Bureau of Statistics (ABS) reported a remarkable drop in the Unemployment Rate to 3.9% in November, surpassing consensus estimates for an increase to 4.2% from the previous month’s 4.1%. Moreover, the number of employed individuals rose by 35.6K, primarily due to a substantial increase in full-time positions. This indicates a strengthening of labor market conditions and diminishes the likelihood of an interest rate cut by the Reserve Bank of Australia (RBA) in February, thus bolstering the Australian Dollar (AUD).
Factors Contributing to AUD/USD Movement
China has announced plans to implement more proactive fiscal measures and a slightly looser monetary policy in 2025 to stimulate domestic consumption. This decision has had a positive impact on the Australian Dollar, coupled with a slight decline in the US Dollar (USD) value, further driving the AUD/USD pair upwards. Recent US consumer inflation data suggests that the Federal Reserve (Fed) may implement a third consecutive rate cut at the upcoming December policy meeting, which has capped the recent rise of the USD to a two-week high. However, data reveals that progress in reducing inflation to the Fed’s 2% target has slowed down.
US Economic and Geopolitical Influences
Geopolitical risks, particularly the ongoing Russia-Ukraine conflict and tensions in the Middle East, are factors limiting the decline of the safe-haven USD. Concerns about potential escalation in the US-China trade war due to President-elect Donald Trump’s tariff plans may also impact the AUD/USD pair. Traders are closely watching the US economic calendar for short-term market movements, with a keen eye on the upcoming FOMC meeting on December 18, which will significantly influence the near-term trajectory of the USD and subsequently affect the currency pair.
Technical Analysis and Outlook
Technical indicators suggest a short-term downtrend for the AUD/USD pair, with oscillators on the daily chart hinting at a negative bias despite a slight recovery. A move beyond the 0.6440 area could signal a shift in momentum towards the 0.6500 psychological level, followed by potential resistance at 0.6540-0.6550. Conversely, support lies at 0.6365, with a breach potentially leading to further downside towards the YTD low at 0.6335 and beyond.
Conclusion
The AUD/USD pair’s movement is influenced by a combination of economic data, geopolitical tensions, and central bank decisions. Understanding these factors and their impact on currency pairs is essential for investors and traders looking to navigate the foreign exchange market effectively. Stay informed, monitor key events, and analyze technical patterns to make informed decisions in your financial endeavors.