AUD/USD Finds Support Despite Higher AU Unemployment

  • AUDUSD
    (${instrument.percentChange}%)

AUD/USD Analysis

The pair is having a tough February, following a three-month profitable streak, as the USDOLLAR has benefited from the repricing in market expectations around the Fed's policy path. After the blockbuster jobs report earlier in the month, Tuesday's higher than expected CPI inflation and a series of hawkish Fed-speak, CME's FedWatch Tool now assigns the highest probability to rates peaking at a 5.5%, but still leaves room for cuts towards the end of the year. [1]

The Reserve Bank of Australia meanwhile, delivered another 25 basis points rate hike last week, pointed to "further increases" and removed the "…but it is not on a pre-set course" reference of the previous statement – striking a more hawkish tone. [2]

This was driven by raising inflation, as headline CPI hit 7.8% y/y in the fourth quarter and the highest since 1990. Furthermore, the labor market is "very tight", with unemployment hovering around fifty-year lows for a protracted period of time. [2]

Today's latest data however, showed that Unemployment ticked up to 3.7% (from 3.5% previously) in January, to the highest level in eight-moths. The release may take some pressure off from the RBA and AUD/USD initially reacted lower. However, unemployment is still close to historic lows and the central bank has pointed to further tightening. The Aussie avoided new month lows and quickly covered the losses, lacking frim direction.

Trade the News: View our Economic Calendar

AUD/USD remains vulnerable to the key 0.6800-0.6760 region, which contains a confluence of supports that have the ability to contain further losses. A strong catalyst will be needed for daily closes below this area, which would expose the pair to 0.6628.

On the other hand, the Aussie shows resiliency and may find the chance to retake 0.7000, but does not inspire much confidence at this stage, for setting new monthly highs (0.7158).

Nikos Tzabouras

Senior Financial Editorial Writer

Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.

With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.

References

1

Retrieved 16 Feb 2023 https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html

2

Retrieved 15 Jun 2024 https://www.rba.gov.au/media-releases/2023/mr-23-04.html

${getInstrumentData.name} / ${getInstrumentData.ticker} /

Exchange: ${getInstrumentData.exchange}

${getInstrumentData.bid} ${getInstrumentData.divCcy} ${getInstrumentData.priceChange} (${getInstrumentData.percentChange}%) ${getInstrumentData.priceChange} (${getInstrumentData.percentChange}%)

${getInstrumentData.oneYearLow} 52/wk Range ${getInstrumentData.oneYearHigh}
Disclosure

Any opinions, news, research, analyses, prices, other information, or links to third-party sites contained on this website are provided on an "as-is" basis, as general market commentary and do not constitute investment advice. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is therefore not subject to any prohibition on dealing ahead of dissemination. Although this commentary is not produced by an independent source, FXCM takes all sufficient steps to eliminate or prevent any conflicts of interests arising out of the production and dissemination of this communication. The employees of FXCM commit to acting in the clients' best interests and represent their views without misleading, deceiving, or otherwise impairing the clients' ability to make informed investment decisions. For more information about the FXCM's internal organizational and administrative arrangements for the prevention of conflicts, please refer to the Firms' Managing Conflicts Policy. Please ensure that you read and understand our Full Disclaimer and Liability provision concerning the foregoing Information, which can be accessed here.

Past Performance: Past Performance is not an indicator of future results.

Spreads Widget: When static spreads are displayed, the figures reflect a time-stamped snapshot as of when the market closes. Spreads are variable and are subject to delay. Single Share prices are subject to a 15 minute delay. The spread figures are for informational purposes only. FXCM is not liable for errors, omissions or delays, or for actions relying on this information.