- The Australian economy added 47,500 jobs in August, beating estimates of 26,400.
- RBA remained cautious as other major central banks reduced borrowing costs.
- The US central bank cut borrowing costs by a significant 50 basis points, putting pressure on the dollar.
The AUD/USD forecast shows a sharp rise in the pair after better-than-expected Australian employment data. At the same time, market participants were still reeling from a major rate cut by the US central bank.
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Data early Thursday showed the Australian economy added 47,500 jobs in August, beating estimates of 26,400. The jump pointed to a resilient economy, reducing the chances of an RBA rate cut this year.
Moreover, the unemployment rate remained stable at 4.2%. RBA remained cautious as other major central banks reduced borrowing costs. Policymakers noted that stubborn inflation could push back the timing of the first rate cut to some time next year. Initially, market participants were hoping for a rate cut in December. However, following a rate cut in the jobs report, expectations fell, boosting the Australian dollar.
Notably, the RBA remains on the sidelines after the Fed implemented its first rate cut on Wednesday. Accordingly, the Australian dollar has an advantage over most of its peers. The US central bank cut borrowing costs by a significant 50 basis points, putting pressure on the dollar. For months, traders have speculated about the timing and size of the first rate cut. Initially, the data supported a smaller cut. However, this changed late last week after several key sources suggested a more significant rate cut.
The Fed delivered a significant rate cut and forecast more. More rate cuts in the US, while the RBA remains cautious, are likely to keep the Aussie on top.
AUD/USD key events today
AUD/USD Technical Forecast: Bulls break above 0.6800
On the technical side, the AUD/USD price broke above the 0.6800 resistance level. The sudden move pushed the price well above the 30-SMA, strengthening the bullish bias. At the same time, the RSI is entering the overbought region, indicating an increase in bullish momentum.
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The bulls have set their target at the key level of 0.6850. However, after such a steep rally, the price could pause and pull back to retest the 0.6800 level before continuing higher.
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