In response to a robust US Nonfarm Payrolls report that surpassed expectations, the AUD/USD experienced a sharp decline of over 0.90% on Friday. The surge in US Treasury yields, triggered by the impressive job addition of 353K against a forecasted 180K, overshadowed expectations of a rate cut by the Federal Reserve in March. As of the latest update, the currency pair is trading at 0.6511.
The US labor market demonstrated strength as the Nonfarm Payrolls report revealed the addition of 353K jobs, surpassing the anticipated 180K and outperforming the revised December figures. The Unemployment Rate held steady at 3.7%, and Average Hourly Earnings (AHE) showed an increase, with the monthly AHE rising to 0.6% and the year-over-year rate climbing to 4.5%.
Post the report, the yield on the US 10-year Treasury note surged from 3.90% to 4.06%, witnessing a 15 basis points increase. The US Dollar Index (DXY) concurrently reached a seven-week high at 104.04, reflecting the dollar’s strength against major currencies.
Additional economic indicators revealed modest climbs in Factory Orders and improved Consumer Sentiment by the University of Michigan, registering 79.1 in January.
Looking ahead, the Australian Dollar’s performance will be influenced by the Reserve Bank of Australia‘s (RBA) monetary policy decision, followed by RBA Governor Michele Bullock’s press conference. Subsequently, attention will shift to key economic data releases, including the AI Group Industry Index, Westpac Consumer Confidence, and NAB Business Confidence.
Technically, the AUD/USD has shifted to a neutral-to-downward bias after dipping below the 200-day moving average (DMA) and breaching the 100-DMA at 0.6527. A sustained close below these levels could expose the 0.6500 psychological mark. Conversely, a reversal could see buyers aiming to regain the 100-DMA, with resistance levels at 0.6550 and the 200-DMA.
