The Australian Dollar (AUD) gained momentum during the early European session on Thursday, buoyed by a stronger-than-expected domestic jobs report. This development bolsters the case for another potential rate hike by the Reserve Bank of Australia (RBA). Additionally, the positive sentiment in global equity markets supports the risk-sensitive Aussie, aiding the AUD/USD pair in a modest recovery from a two-week low of around 0.6715 reached on Tuesday.
However, the rally in the Australian Dollar is tempered by rising economic concerns in China and declining copper prices, which prevent traders from making aggressive bets on the resource-linked currency. Meanwhile, the US Dollar (USD) recovers some of its previous day’s losses, gaining positive traction and limiting the AUD/USD pair’s upside potential. This dynamic calls for caution before concluding that the recent pullback from a multi-month peak has ended.
Daily Digest Market Movers: AUD Faces Mixed Sentiment
The Australian Bureau of Statistics (ABS) reported a rise in the unemployment rate to 4.1% in June, slightly above expectations and the previous figure of 4.0%. Despite this, the number of employed people increased significantly from 39.7K in May to 50.2K in June, far surpassing the consensus estimate of 20.0K. This mixed data has a limited impact on expectations for the RBA’s next policy move but provides a modest boost to the Australian Dollar and the AUD/USD pair.
Conversely, the US Dollar attracts buyers, recovering from its near four-month low, which caps significant gains for the AUD. Market expectations for a September interest rate cut by the Federal Reserve are fully priced in, with investors anticipating two rate cuts by the year’s end, which should limit the USD’s upside.
Technical Analysis: Bearish Signals for AUD/USD
From a technical standpoint, the AUD/USD pair finds support at an upward-sloping trend line. Along with another ascending trend line, this forms an ascending wedge—a bearish pattern. Oscillators on the daily chart have started drifting into negative territory, suggesting that the recovery attempt may quickly fizzle out.
Further upward movement is likely to encounter resistance near the mid-0.6700s, remaining capped at that level. However, sustained buying could push prices back towards the 0.6800 mark, a multi-month peak reached last week. Strength beyond this level would negate the near-term bearish outlook, paving the way for the resumption of the prior uptrend.
Conversely, immediate support is pegged at the trend line near the 0.6700 round figure, followed by the 50-day Simple Moving Average (SMA) around the 0.6665 region. A decisive break below this level could trigger bearish momentum, potentially accelerating the fall towards the 100-day SMA support near the 0.6600 mark.
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