-
US nonfarm payrolls surge, unemployment climbs
-
RBA expected to pause at Tuesday’s meeting
-
The Australian dollar is coming off a strong week, with gains of 1.35%. AUD/USD has edged lower on Monday, trading at 0.6594, down 0.17%.
US Nonfarm Payrolls surge
Friday’s US employment report was a reminder that the labour market remains robust. Payrolls surged by 339,000 in May, crushing the estimate of 195,000. The April reading was revised upwards to 294,000 from 253,000, another sign of a strong labour market. However, this was not the entire story. The unemployment surprised to the upside, rising from 3.4% to 3.7%, while wage growth ticked lower to 0.3%, down from 0.4%.
The takeaway from the mixed jobs report is that job growth remains surprisingly strong, but at the same time, there are signs the labour market is losing some steam. The pockets of softness in the report could be enough for the Fed to opt for a pause at the June 14th meeting, after ten straight rate increases.
Market expectations have been all over the place, as it has been a tricky task to pin down what the Fed has planned. A month ago, the markets put the probability of a pause at 91%. This fell to 36% a week ago and has bounced back up to 78%. With a blackout period starting today, we won’t have any Fed speak to provide insights on the Fed’s thinking ahead of the meeting.
Will RBA take a pause?
The Reserve Bank of Australia meets on Tuesday and the meeting is live, with the markets pricing in a pause at 67% and a 25-basis point hike at 33%. Just a week, ago, the markets had priced in a pause at a massive 97%.
The RBA is in a pickle, as inflation remains high and the employment market is tight but growth has cooled down. Inflation is at 7%, well above the RBA’s target of 2-3%. Governor Lowe has been hawkish and said last week that the Bank will do whatever it takes to bring inflation back down to target and Lowe shocked the markets with a rate hike in May. A pause seems the more likely move, but as we have seen, Lowe has a habit of surprising the markets.
AUD/USD technical
-
AUD/USD is putting pressure on support at 0.6568, followed by support at 0.6496.
-
There is resistance at 0.6568 and 0.6496.
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities.
Opinions are the authors — not necessarily OANDA’s, its officers or directors. OANDA’s Terms of Use and Privacy Policy apply. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Recommended Content
Editors’ Picks
EUR/USD clings to gains near 1.0700, awaits key US data
EUR/USD clings to gains near the 1.0700 level in early Europe on Thursday. Renewed US Dollar weakness offsets the risk-off market environment, supporting the pair ahead of the key US GDP and PCE inflation data.
USD/JPY keeps pushing higher, eyes 156.00 ahead of US GDP data
USD/JPY keeps breaking into its highest chart territory since June of 1990 early Thursday, recapturing 155.50 for the first time in 34 years as the Japanese Yen remains vulnerable, despite looming intervention risks. The focus shifts to Thursday's US GDP report and the BoJ decision on Friday.
Gold closes below key $2,318 support, US GDP holds the key
Gold price is breathing a sigh of relief early Thursday after testing offers near $2,315 once again. Broad risk-aversion seems to be helping Gold find a floor, as traders refrain from placing any fresh directional bets on the bright metal ahead of the preliminary reading of the US first-quarter GDP due later on Thursday.
Injective price weakness persists despite over 5.9 million INJ tokens burned
Injective price is trading with a bearish bias, stuck in the lower section of the market range. The bearish outlook abounds despite the network's deflationary efforts to pump the price.
Meta takes a guidance slide amidst the battle between yields and earnings
Meta's disappointing outlook cast doubt on whether the market's enthusiasm for artificial intelligence. Investors now brace for significant macroeconomic challenges ahead, particularly with the release of first-quarter GDP data.