- Data on Thursday revealed a bigger-than-expected jump in employment in Australia.
- Australia’s unemployment rate jumped from 3.9% to 4.1%.
- Investors have increased the likelihood of a RBA rate cut in December to 54%.
The AUD/USD outlook has turned slightly bearish as the Aussie retreats from recent highs, boosted by an unexpected jump in Australia’s unemployment rate. Meanwhile, the dollar remained weak following data showing easing US inflation.
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Data on Thursday revealed a bigger-than-expected jump in Australian employment. The country added 38,500 jobs in April from the previous month, beating expectations for a gain of 23,700. However, the market’s focus was on the unemployment rate, which jumped from 3.9% to 4.1%. This was a sign that the demand on the labor market was declining. Therefore, there is less chance that the RBA will rise again.
After the report, investors increased the probability of a rate cut in December to 54%. As a result, the Australian dollar fell. If the chances of a cut in 2024 increase, the Aussie loses its advantage against the dollar. However, Australia is likely to be among the last to have lower interest rates compared to other major economies.
The fall in the AUD/USD pair came after hitting a high in the previous session on increasing expectations of a Fed rate cut. Market participants gained confidence that the Fed will cut rates in September after US CPI data missed forecasts. Inflation surprised by falling for the first time this year, giving the Fed some relief that the downward trend is intact. At the same time, retail sales fell, which indicates weaker consumer spending and a slowdown in the economy.
AUD/USD key events today
- Initial US Unemployment Claims
AUD/USD Technical Outlook: Bears resurface at channel resistance
On the technical side, the AUD/USD price is pulling back after retesting the channel resistance line. However, the bullish bias remains intact as the price made a new high above the key 0.6650 level. Furthermore, it remains within the bullish channel that was formed when the trend reversed to bullish.
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Therefore, a pullback could retest the 0.6650 level and the 30-SMA support before the uptrend resumes. Meanwhile, a deeper pullback would retest channel support where the bulls will once again take control. The bias will shift bearish only if the price breaks below the support line of the channel.
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