- US November’s Nonfarm Payrolls crushed estimates, and wages rose.
- The US Dollar reclaimed the 105.000 mark, underpinned by high US bond yields.
- RBA’s Lowe: “Australia’s inflation expectations well anchored.”
The Australian Dollar (AUD) dropped against the US Dollar (USD) following the release of a positive employment report in the United States (US) which showed an increase in wages, pressuring the Federal Reserve (Fed) to take action. At the time of writing, the AUD/USD is trading at 0.6771 after hitting a daily high of 0.6832.
Positive US jobs data bolstered the US Dollar
US stocks are trading with losses after November’s US Nonfarm Payrolls (NFP) report. Data showed that the economy added 263,000 new jobs, and October’s was upward revised 284,000 jobs, the Department of Labor (DoL) report showed. In the same statement, the Unemployment Rate was unchanged at 2.7%, while Average Hourly Earnings rose by 5.1% YoY, vs. 4.6% consensus, reigniting wage inflation spirals, adding further pressure on the Fed.
The US Dollar Index (DXY), which tracks the greenback’s performance against six currencies, stages a recovery, gaining 0.49%, up at 105.234, underpinned by US Treasury yields. The US 10-year Treasury bond yield rises nine bps, at 3.599%.
Thursday, the Institute for Supply Management (ISM) revealed that November’s manufacturing activity in the US shrank to 49.0 from 50.2 in the previous month. The figures reignited recession fears, as the report showed new orders are falling, demand eased, and the employment index contracted. Therefore, investors’ mood dwindled, as demonstrated by US equities finishing the session with losses.
Meanwhile, Federal Reserve Chairman Jerome Powell opened the door for lower-sized rate hikes, reinforcing the latest meeting minutes sentence that “a substantial majority of participants judged that a slowing in the pace of increase would likely soon be appropriate.” On those remarks, the AUD/USD hit a fresh three-month high, though the rally stalled, on the US ISM report.
Earlier, during the Asian session, the Australian economic docket featured the release of Retail Sales for October, which shrank 0.2% MoM, vs. 0.6% expansion, while housing data remained in negative territory but was better-than-expected. Also, the Reserve Bank of Australia (RBA) Governor Philippe Lowe said that inflation expectations in Australia are “well anchored.” He added that domestic spending remains resilient amidst higher interest rates, and the RBA’s decision to moderate rate hikes reflects monetary policy lags.
AUD/USD Key Technical Levels
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