AUD/USD endures losses in light of strong US labor market and rising US yields

The Aussie dollar (AUD) experienced a dip in its Friday trading session, with the AUD/USD trading lower at approximately 0.6580. The downward movement can primarily be attributed to robust American labor market data, coupled with escalating U.S. yields, which drove demand to the Greenaback

The US Bureau of Labor Statistics data indicated that the November Average Hourly Earnings increased by 0.4% MoM, higher than the 0.3% expected and the previous 0.2%. Moreover, US Nonfarm Payrolls surprisingly jumped to 199K in November from the former 150K, surpassing the forecast of 180K, while the Unemployment rate declined to 3.7% from 3.9%. 

As a reaction, the US Treasury yields are on the rise. The 2-year rate is at 4.70%, while the 5 and 10-year rates are trading at 4.24% and 4.25%, respectively, which favors the strengthening of the USD. In that sense, the strong employment figures have spurred speculations surrounding the Federal Reserve's monetary policy regarding how long the bank will maintain rates at restrictive levels. It's worth noticing that Fed officials left the door open for further tightening as they haven’t seen enough evidence of the economy cooling down, so strong data may delay rate cuts.

Next week, the US will release Consumer Price Index (CPI) figures from November, which will be closely watched by markets.

AUD/USD levels to watch

The AUD/USD daily chart is delivering mixed signals. Despite the negative slope in the Relative Strength Index (RSI) indicating lowered buying momentum in the short term, the indicator is still within the positive territory, suggesting that, overall, bullish sentiment has not entirely dissipated. However, the Moving Average Convergence Divergence (MACD) prints rising red bars, indicating growing bearish momentum.

Although bears appear to be gaining ground recently, the index's placement above its 20-day, 100-day, and 200-day Simple Moving Averages (SMAs) can't be overlooked. This position illustrates that despite short-term selling pressures, the overall trend remains bullish, indicating that the latter maintains a stronghold in the wider context in this tug-of-war between bears and bulls.

Support Levels: 0.6575 (200-day SMA), 0.6560 (20-day SMA), 0.6530.
Resistance Levels: 0.6600, 0.6630, 0.6650.

AUD/USD daily chart