Australian Dollar Rises as US Dollar Stabilizes Before Economic Data Release

The Australian Dollar (AUD) appreciated against the US Dollar (USD) Thursday, sparked by positive employment data from Australia. The Australian Bureau of Statistics (ABS) revealed that the Australian Employment Change saw a notable increase of 65,200 in December, marking a significant recovery from the previous month’s revised job losses of 28,700. This figure surpassed the consensus forecast of 30,000 new jobs.

Additionally, the Unemployment Rate declined to 4.1%, down from 4.3%, outperforming market expectations of 4.4%. Sean Crick, head of labor statistics at ABS, noted a considerable rise in employment among individuals aged 15 to 24, contributing to both the employment surge and reduced unemployment figures.

US Dollar Stability Ahead of Key Economic Data

Meanwhile, the US Dollar Index (DXY), which gauges the USD against six major currencies, maintained stability around 98.80. This stability followed a series of modest gains the prior day, aided by remarks from US President Donald Trump regarding tariffs on European goods. Trump indicated a potential delay in imposing tariffs, which appeared to bolster market sentiment.

Recent labor market data in the US has tempered expectations of imminent Federal Reserve (Fed) rate cuts, shifting projections for further reductions until June. Analysts from Morgan Stanley have modified their expectations, now forecasting one rate cut in June and another in September, deviating from their earlier aim of January and April cuts.

Global Factors Impacting the Australian Dollar

The People’s Bank of China (PBOC) announced its decision to maintain the Loan Prime Rates, with the one-year and five-year rates at 3.00% and 3.50%, respectively. Given China’s status as Australia’s largest trading partner, fluctuations in the Chinese economy can significantly influence the Australian Dollar. China’s Industrial Production exhibited a 5.2% year-over-year increase in December, while Retail Sales rose by only 0.9%, falling short of expectations.

The Australian Dollar is further influenced by domestic inflation data. The TD-MI Inflation Gauge showed a rise to 3.5% year-over-year in December, up from 3.2%. The Reserve Bank of Australia (RBA) noted that while inflation has eased from its peak in 2022, the risks of renewed upward momentum linger.

Technical Analysis of AUD/USD

The AUD/USD pair was trading around 0.6790, indicating a bullish trend within an ascending channel. The nine-day Exponential Moving Average (EMA) is positioned above the 50-day EMA, adding to the positive outlook. Immediate resistance lies at the psychological level of 0.6800, followed by the upper channel boundary near 0.6810. Should the pair break above this channel, it could aim for 0.6942, the highest point since February 2023.

• Immediate Support: 0.6732 (nine-day EMA)
• Break Below Support: Targets 0.6680 and 0.6656 (50-day EMA)

Current Performance Comparison of Key Currencies

In conclusion, the Australian Dollar’s performance reflects a complex interplay of domestic labor market developments and global economic factors. As the US and Australian economies continue to navigate their respective challenges, the AUD’s outlook will remain sensitive to shifts in monetary policy and international trade dynamics.