AUD/USD Cautious after Poor Australian Employment Report
AUD/USD
Unemployment in Australia steadied at 3.9% in December, but the country shed 65,100 jobs, marking the first loss since summer and the worst print in more than two years. The Reserve bank of Australia has not ruled out further tightening, but kept rates at 5.35% at its last meeting. Today's poor employment report along with progress on inflation that decelerated to 4.1% y/y in November, helps policymakers stay on the sidelines.
Their US peers are more dovish, as their projections suggest at least three rate cuts this year. However, recent figures had shown stickiness in inflation and some officials appeared more cautious this week. Governor Waller saw "no reason to move as quickly or cut as rapidly as in the past" [1]. This led to a de-escalation in aggressive expectations around the policy path, but markets are still very hawkish. CME's Fed Watch Tool still assigns the highest probability to 150 basis points of cuts this ear, starting in March. [2]
This week's risk aversion on escalating hostilities in the Middle East and the rethink around the Fed's rate cut prospects have sent AUD/USD to a steep decline. Today's Australian data don't help the Aussie and make it vulnerable to 0.6411, although 0.6269 is distant.
Despite another poor performance this week, the pair tries to find support today, as the fall looks stretched and the Fed is closer to a policy pivot than its Australian counterpart. The daily Ichimoku cloud has the potential to contain the fall, but catalyst would be needed for a return above the EMA200 (at around 0.6660) that would shift bias on the upside.
Nikos Tzabouras
Senior Financial Editorial Writer
Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.
With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.
References
| Retrieved 18 Jan 2024 https://www.federalreserve.gov/newsevents/speech/waller20240116a.htm | |
| Retrieved 29 Apr 2024 https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html |
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