• Australia’s employment change declines.

  • Markets lower expectations of a Fed pause in June.

The Australian dollar has resumed its downswing on Thursday after taking a pause a day earlier. AUD/USD is trading at 0.6641 in Europe, down 0.26% on the day.

Australian employment slips

Australia’s April employment report surprised to the downside today, sending the Australian dollar lower. Net employment fell by 4,300 in April, after a gain of 61,100 in March. The market estimate stood at 25,000. What was more disconcerting was the full-time employment decline of 27,100, after a gain of 72,000 in March. As well, unemployment jumped to 3.7% in April, up from 3.5% a month earlier.

The soft job numbers provide support for the Reserve Bank of Australia to pause its rate hikes at the June 6th meeting, after shocking the markets with a 25-basis point hike earlier this month. The markets are confident of a pause, which stands at 100% probability according to the ASX RBA Rate Tracker. The central bank would like to ease up on its rate hikes and guide the economy to a soft landing, and a cooler labour market will certainly help. Still, inflation will have to cooperate and continue to head lower for the RBA to take another pause.

The US dollar is showing gains against the major currencies, as progress was reported in debt ceiling talks between Republicans and Democrats. The US has never defaulted on its debt and there’s every reason to believe that lawmakers will resolve the crisis before the June 1st deadline.

Investors continue to scale back expectations that the Fed will ease up on its rate policy. Only a week ago, the odds of a pause were 89% and a 25-bp rate hike at 11%, according to CME’s FedWatch. This has been revised to a 74% chance of a pause and a 26% chance of a 25-bp increase. The markets have mostly priced in a rate cut in December (71%), despite Jerome Powell and other members stating that no rate cuts are planned. JP Morgan came out in support of the market’s stance earlier in the week, saying that the economy was likely heading into a recession and the Fed would have to respond with rate cuts.

AUD/USD technical

  • AUD/USD is putting pressure on resistance at 0.6665. This is followed by 0.6761.

  • 0.6517 and 0.6434 are providing support.

AUDUSD

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


Recommended Content

Editors’ Picks

EUR/USD stabilizes above 1.0900 ahead of Powell speech

EUR/USD stabilizes above 1.0900 ahead of Powell speech

EUR/USD fluctuates slightly above 1.0900 after erasing the bearish opening gap. The positive opening in Wall Street makes it difficult for the US Dollar to gather strength and helps the pair hold its ground ahead of Fed Chairman Powell's speech at the Economic Club of Washington.

EUR/USD News

GBP/USD struggles to clear 1.3000, eyes on Fed Chairman Powell

GBP/USD struggles to clear 1.3000, eyes on Fed Chairman Powell

GBP/USD finds it difficult to build on the previous week's gains and trades below 1.3000 on Monday. Investors refrain from taking large positions ahead of Fed Chairman Powell's speech and allow the pair to stay in its daily range.

GBP/USD News

Gold on its route to retest record highs at $2,450

Gold on its route to retest record highs at $2,450

Gold regains its traction and trades in positive territory slightly above $2,420 after dropping toward $2,400 at the beginning of the week. Investors await Fed Chairman Powell's appearance at the Economic Club of Washington.

Gold News

Crypto Today: Bitcoin, Ethereum and XRP what to expect as SEC executive says Howey test applies to cryptos

Crypto Today: Bitcoin, Ethereum and XRP what to expect as SEC executive says Howey test applies to cryptos

Bitcoin trades above $62,500 on Monday, sustains above key support as head of US SEC enforcement division says Howey test applies to cryptos. Ethereum and XRP trade above key support, extending gains by nearly 3% on the day. 

Read more

Five fundamentals for the week: Markets set to move on Trump fallout, ECB, US Retail Sales, more Premium

Five fundamentals for the week: Markets set to move on Trump fallout, ECB, US Retail Sales, more

"Donald Trump was shot" – the shocking reports from Pennsylvania reverberated across markets and will likely continue doing so. Investors will also watch for further signs of slowdown and European defiance. Here are the three key events to watch.

Read more

Majors

Cryptocurrencies

Signatures