- RBA Governor Michelle Bullock said it was too early to think about a short-term cut in interest rates.
- US private employment was lower than expected in August.
- ISM PMI data showed improved business activity in the US services sector.
The AUD/USD outlook shows mild optimism after the Governor of the Reserve Bank of Australia maintained a hawkish tone in the previous session. At the same time, there was caution as markets eagerly awaited monthly US employment figures.
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RBA Governor Michelle Bullock said Thursday that it is too early to think about a short-term interest rate cut. According to her, inflation in the country is still high, so it needs high rates for longer. Her remarks came despite data showing weak economic expansion in the second quarter. At the same time, inflation in Australia cooled to 3.5% in July, approaching the central bank’s target range of 2-3%.
RBA policymakers maintained a cautious tone while other major central banks cut rates. Officials argue that because the RBA has not raised rates as high as other major central banks, they need more time to tame inflation. Still, investors still value the chances of a 42% rate cut in November.
Meanwhile, the US dollar was hurt on Friday after mixed economic indicators. Data from the previous session revealed that private sector employment in the US was lower than expected. There were 99,000 new jobs, compared with forecasts of 144,000. Consequently, investors are concerned about a worsening labor market.
However, another report showed a larger-than-expected drop in jobless claims, allaying fears of a sharp decline. At the same time, ISM PMI data show improved business activity in the services sector. All eyes are now on the non-farm payrolls report. Experts believe that figure will miss forecasts, given recent employment indicators. Therefore, the dollar could collapse.
AUD/USD key events today
- Average hourly earnings in the US m/m
- Change in non-farm employment in the US
- Unemployment rate in the US
AUD/USD Technical Outlook: Weak bullish price action
On the technical side, the AUD/USD price rose to retest the 30-SMA resistance. The bullish move comes after the price found solid support at the key 0.6700 level. Despite this, the bears remain in control, with the price below the SMA and the RSI below 50.
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Moreover, the bullish move shows weak price action in line with the correction. Therefore, bears could emerge at the 30-SMA to push the price lower. A break below 0.6700 would create a lower low, strengthening the bearish bias.
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