The Australian Dollar (AUD) continues to struggle against the US Dollar (USD) for a second consecutive day, trading near the 0.6300 mark during Friday’s Asian session. The pair remains under pressure as the Greenback strengthens on safe-haven demand, driven by concerns over US tariff policies and broader economic uncertainties.
USD Strengthens Amid Risk Aversion and Economic Concerns
The US Dollar remains supported as investors seek safety in Treasuries, pushing US bond yields lower amid geopolitical and economic uncertainty. Federal Reserve (Fed) Chair Jerome Powell downplayed the inflationary effects of tariffs, calling them temporary, but acknowledged broader economic risks. While recession fears have increased, Powell suggested they remain relatively low at this stage.
On the economic front, US Initial Jobless Claims for the week ending March 15 increased slightly to 223K, marginally missing the 224K estimate but surpassing the previous week’s revised figure of 221K. Meanwhile, the Philadelphia Fed Manufacturing Survey declined for the second consecutive month, falling from 18.1 in February to 12.5 in March, though it remained above expectations of 8.5.
Australian Dollar Weighed Down by Weak Employment Data
The Australian Dollar faces additional headwinds following weaker-than-expected employment figures. While Australia’s unemployment rate held steady at 4.1% in February, a surprise drop in overall employment has raised concerns about labor market softness. This has fueled speculation that the Reserve Bank of Australia (RBA) may have more room to ease monetary policy.
Despite this, RBA Assistant Governor Sarah Hunter emphasized the central bank’s cautious approach to further rate cuts, noting that while there is room to ease policy restrictiveness, the board remains more hesitant than markets about additional reductions.
AUD/USD Remains Vulnerable Below 0.6300
With the USD maintaining its strength and the RBA showing cautious dovishness, AUD/USD remains vulnerable. Unless the market sees stronger domestic data or a shift in Fed policy expectations, downside risks for the pair persist, with the next support levels near 0.6270 and 0.6250.
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