AUD/USD climbs despite risk aversion amidst Fed’s rate hike; RBA SoMP eyed

The Australian Dollar (AUD) extended its gains against the US Dollar (USD) for four straight days after the US Federal Reserve (Fed) decided to boost rates by 25 bps amidst risk aversion on Wednesday. Sentiment remains fragile, as witnessed by Wall Street, which registered losses. The AUD/USD is trading at 0.6692, flat as Friday’s Asian session begins.

AUD Benefits from Trade Surplus and Weakening USD

The AUD/USD dipped as low as 0.6640 as the US financial banking turmoil continued. Australia’s Trade Balance printed a surplus bolstered by exports to China, as it hit a record high, sponsored by an increment in iron ore exports. The Trade Balance for March rose by A$15.3B above estimates of A$12.7B and exceeded February’s A$14.15B.

Additionally, the US Dollar weakened in the early North American session after Jerome Powell and Co hiked rates by 25 bps and signaled that a pause was possible. Nonetheless, the Fed’s Chair revealed that inflation is too high, the labor market remains tight, and that rate cuts are not expected this year.

Meantime, data revealed by the US Bureau of Labor Statistics (BLS) showed that Initial Jobless Claims for the week ending April 29, rose to 242K, above 240K expected by analysts, while Continuing Claims updated until April 22 dropped to 18.1 million.

Although the data showed that the jobs market is easing, aligned with the JOLSTs report that highlighted that vacancies moderated, Wednesday’s ADP Employment Change data witnessed the opposite, creating close to 300K private jobs in the economy.

Upcoming economic data to watch

On Friday, the Australian economic agenda will feature Home Loans for March and the Reserve Bank of Australia (RBA) Statement of Monetary Policy (SoMP). On the US front, the docket will feature the Nonfarm Payrolls, Average Hourly Earnings, and the Unemployment Rate on the labor market side. Fed speakers will begin to cross wires led by Lisa Cook.

AUD/USD Key Technical Levels