- In November, employment in Australia exceeded expectations for the second month in a row.
- The Reserve Bank of Australia may have concluded its tightening cycle.
- Following the Federal Reserve’s latest economic projections, the dollar hit a new four-month low.
AUD/USD was bullish on Thursday as the Australian dollar catapulted to a near five-month high, boosted by strong employment data. However, the excitement in the air took a turn. Futures markets are currently pointing to the prevailing sentiment: The Reserve Bank of Australia may have concluded its tightening cycle. Moreover, expectations now include more than 50 basis points of easing for 2024.
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In November, employment in Australia exceeded expectations for the second month in a row. Notably, there was an increase of 61,500 jobs compared to a revised 42,700 in October, beating the expected increase of about 11,000. However, the unemployment rate rose to 3.9%, the highest since last May. More individuals were actively seeking employment, which contributed to signs of a loosening of the labor market. Meanwhile, the participation rate reached a record 67.2%.
RBA kept interest rates at a 12-year high of 4.35% last week. Moreover, to curb inflation, the RBA undertook an aggressive tightening campaign, raising interest rates by 425 basis points – the most significant in the bank’s history.
Meanwhile, the dollar fell to a new four-month low following the Federal Reserve’s latest economic projections. The Fed signaled the end of the rate hike cycle. Moreover, policymakers expect lower borrowing costs in 2024.
AUD/USD key events today
- Basic US retail
- US unemployment claims
AUD/USD Technical Forecast: Bulls break free from consolidation
AUD/USD bulls have broken out of consolidation with a sharp move on the charts. The previous bullish move was paused when the bullish momentum weakened at the key resistance level of 0.6650.
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Consequently, the bears pushed the price below the 30-SMA, leading to a change in sentiment. However, this new direction was short-lived as the price failed to break below the key support level of 0.6551.
As a result, the price entered a period of consolidation, with bears and bulls fighting for control. Finally, the bulls took control with a break above the range area resistance and the key 0.6650 level. At the same time, the RSI rose to an overbought level, indicating strong bullish momentum. The next hurdle for the pair is at the key level of 0.6750.
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