The Australian Dollar (AUD) has halted its three-day losing streak against the US Dollar (USD) following the release of a robust Australian employment report on Thursday. According to the data, the seasonally adjusted Employment Change in Australia surged by 64.1K in September, significantly exceeding market expectations of a 25.0K increase and bringing total employment to a record 14.52 million. This uptick comes after a revised rise of 42.6K in the previous month.
Unemployment Rate Stable
Australia’s seasonally adjusted Unemployment Rate remained steady at 4.1% in September, matching the revised figure for August and coming in lower than the anticipated 4.2%. The number of unemployed individuals decreased by 9.2K, bringing the total down to 615,700.
In contrast, the US Dollar has found support from strong labor and inflation data, which have tempered expectations for aggressive easing by the Federal Reserve (Fed).
Traders are eagerly awaiting the release of US Retail Sales data later today, which is expected to show a monthly consumer spending increase of 0.3% in September, up from 0.1% in August.
Market Movers: Australian Dollar Gains Ground After Employment Report
As per the CME FedWatch Tool, there is currently a 92.1% probability of a 25-basis-point rate cut in November, with no expectations for a larger 50-basis-point reduction. During a property market briefing on Thursday, China’s Housing Minister announced plans to initiate one million village urbanization projects, which includes expanding the list of approved projects and increasing bank lending by 4 trillion Yuan. Decisions regarding property restrictions will be made by individual cities based on their economic conditions and local property market situations, according to Bloomberg.
Reserve Bank of Australia (RBA) Deputy Governor Sarah Hunter reiterated the central bank‘s commitment to curbing inflation, emphasizing that while inflation expectations remain well-anchored, ongoing price pressures continue to pose significant challenges.
On Tuesday, Federal Reserve Bank of Atlanta President Raphael Bostic stated he anticipates only one more interest rate cut of 25 basis points this year, as indicated in his projections from last month’s US central bank meeting. He mentioned, “The median forecast was for 50 basis points beyond the 50 basis points already implemented in September. My projection was for an additional 25 basis points,” according to Reuters.
The Australian weekly survey of Consumer Confidence showed little movement, with the ANZ-Roy Morgan Consumer Confidence index remaining steady at 83.4 this week. Despite this unchanged figure, the longer-term trend indicates that Consumer Confidence has been below the 85.0 mark for 89 consecutive weeks, with the current reading 1.3 points higher than the 2024 weekly average of 82.1.
Furthermore, Federal Reserve Bank of Minneapolis President Neel Kashkari reassured markets on Monday by reaffirming the Fed’s data-dependent approach, noting the strength of the US economy, continued easing of inflationary pressures, and a robust labor market, despite a recent uptick in the overall unemployment rate.
Economic Insights and Outlook
The Commonwealth Bank of Australia has indicated expectations that the RBA will implement a 25 basis point rate cut by the end of 2024. The report suggests that a stronger disinflationary trend than anticipated by the RBA is essential for the Board to consider easing policy within this calendar year.
On the other hand, the National Bureau of Statistics of China reported that the country’s monthly Consumer Price Index (CPI) remained unchanged at 0% in September, down from a 0.4% increase in August. The annual inflation rate rose by 0.4%, which fell short of the anticipated 0.6%. Additionally, the Producer Price Index (PPI) decreased by 2.8% year-on-year, a larger drop than the previous decline of 1.8%, exceeding expectations of a 2.5% decrease.
Technical Analysis: AUD/USD Tests 0.6700
The AUD/USD pair is currently hovering around the 0.6700 mark on Thursday. A review of the daily chart indicates that the pair is testing the upper boundary of a descending channel. A successful breakout above this channel could signal a shift in momentum from bearish to bullish. However, bearish sentiment still prevails, with the 14-day Relative Strength Index (RSI) remaining below 50.
On the downside, the AUD/USD pair may target its eight-week low of 0.6622, last touched on September 11. A break below this level could lead to further declines, with the next target being the descending channel’s lower boundary near the psychological support level of 0.6580.
Conversely, a breakout above the descending channel could focus attention on the nine-day Exponential Moving Average (EMA) around 0.6729, followed by the key psychological barrier at 0.6800.
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