The Australian dollar is steady on Thursday. In the European session, AUD/USD is trading at 0.6442, up 0.12%.
Australia’s employment declines
Australia’s job growth hit the breaks in March and fell by 6,600. This missed the market estimate of a gain of 7,700 and follows a blowout gain of 116,500 in February. Still, the drop was not all that concerning as full time employment increased by 27,900 (part-time roles fell by 34,500). The unemployment rate ticked higher to 3.8%, up from 3.7% in March.
Although the job numbers were not flattering, the labor market remains tight. An unemployment level below 4% is close to capacity and the participation rate of 66.6% is indicative of a healthy labor market. The labour market is, however, expected to cool down as elevated interest rates continue to filter through the economy.
The Reserve Bank of Australia meets next month and will provide quarterly updates of its economic forecasts. The central bank will base its rate decision on the strength of the data and today’s employment report will support the RBA continuing to remain patient before cutting rates. Next week brings CPI for the first quarter, which is expected to fall to 3.4%, down from 4.1% in Q4 2023. If inflation does drop significantly, the RBA will be under increased pressure to lower rates.
In the US, the Federal Reserve is watching inflation move the wrong way, and that has alarm bells ringing. Fed Chair Powell said this week that higher-than-expected inflation readings meant that rate cuts would have to wait until the inflation picture improved.
The robust US economy and high inflation has put under question whether the Fed will be able to lower rates this year. The markets have slashed expectations for rate cuts but a September cut remains a strong possibility, with a 69% probability, according to the CME FedWatch tool.
AUD/USD technical
-
AUD/USD continues to test resistance at 0.6437. Above, there is resistance at 0.6472.
-
0.6413 and 0.6378 are the next support levels.
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 stays depressed near 1.0650, awaits US data and Fed verdict
EUR/USD holds lower ground near 1.0650 amid a softer risk tone and broad US Dollar strength on Wednesday. With European markets closed for Labor Day, the pair awaits the US employment data and the Fed policy announcements for the next directional move.
GBP/USD keeps losses below 1.2500 ahead of US data, Fed
GBP/USD holds lower ground below 1.2500 early Wednesday. The stronger US Dollar supports the downtick of the pair amid the cautious mood ahead of the top-tier US employment data and the all-important Fed policy announcements.
Gold sellers keep sight on $2,223 and the Fed decision
Gold price is catching a breather early Wednesday, having hit a four-week low at $2,285 on Tuesday. Traders refrain from placing fresh directional bets on Gold price, anticipating the all-important US Federal Reserve interest rate decision due later in the day.
Ethereum dips below key level as Hong Kong ETFs underperform
Ethereum experienced a further decline on Tuesday following a disappointing first-day trading volume for Hong Kong's spot Bitcoin and ETH ETFs. This comes off the back of increased long liquidations and mixed whale activity surrounding the top altcoin.
Federal Reserve meeting preview: The stock market expects the worst
US stocks are a sea of red on Tuesday as a mixture of fundamental data and jitters ahead of the Fed meeting knock risk sentiment. The economic backdrop to this meeting is not ideal for stock market bulls.