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06/09/24
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AUD Pauses Gains Ahead of US Jobs Data as Market Cautiously Awaits Fed Signals
The Australian Dollar (AUD) has halted its two-day increase against the US Dollar (USD) as market participants take a cautious approach ahead of the upcoming US Nonfarm Payrolls (NFP) report. This critical data is expected to provide insights into the Federal Reserve’s potential direction regarding interest rate adjustments this month. The AUD initially gained momentum due to favorable Trade Balance data released earlier in the week. Nonetheless, statements from Reserve Bank of Australia (RBA) Governor Michele Bullock emphasized that the board deems it premature to consider rate reductions, indicating a sustained cautious stance.
Meanwhile, the US Dollar continues its downward trend, influenced by recent dovish remarks from Federal Reserve officials. Although a few positive economic indicators have somewhat mitigated the dollar’s decline, the overall outlook remains subdued. Notably, the US ISM Services PMI increased slightly to 51.5 in August, surpassing expectations. Officials have hinted at an eventual easing of interest rate policies, suggesting that the central bank may take a more lenient approach in the coming months as inflation trends stabilize.
In labor market news, the ADP Employment Change data revealed an increase of just 99,000 private-sector jobs in August, below previous estimates and showing a decline from July’s figures. Additionally, weekly Initial Jobless Claims saw a slight rise, which may further impact market sentiment surrounding employment figures.
Australia’s economic indicators reflect a widening trade surplus and modest growth in GDP. The trade surplus surged to AUD 6,009 million in July, outperforming expectations, while GDP showed a quarterly increase of 0.2%. Additionally, the Judo Bank Composite PMI indicated a recovery in services activity, highlighting underlying growth within the Australian economy.
Current trading for the AUD/USD pair hovers around 0.6740, with bearish signals noted on the daily chart. If the pair breaks below support at the 50-day Exponential Moving Average, it could further solidify a downward trend. Resistance remains at the nine-day EMA, and a breakout above could signal a retest of higher levels.
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