AUD/USD: Australian Dollar Headwinds Despite Strong Jobs Data

AUD/USD faces challenges despite Australian solid jobs data. US economic weakness and Fed stance influence potential downside.

• Despite positive Australian employment data exceeding expectations, the Australian dollar has slipped below the critical 0.6500 psychological level.
• The overall strength of the Australian labor market remains intact, but challenges persist, prompting vigilance from the Reserve Bank of Australia (RBA).
• In the context of a weakening USD and mixed economic indicators, the focus shifts to US building permit figures and continued commentary from Federal Reserve officials, influencing the trajectory of AUD/USD in the near term.

The Australian dollar has dipped below the key 0.6500 level once again. The currency faces challenges despite better-than-expected Australian employment change data indicating a robust job market. The slight increase in unemployment to 0.1% did not deter the overall strength of the Australian labor market, likely keeping the Reserve Bank of Australia (RBA) vigilant.

AUD/USD: Australian Dollar Headwinds Despite Strong Jobs Data

On the USD front, continuous jobless claims have reached levels not seen in approximately two years, accompanied by an initial claims beat. Recent US economic data signals weakness, but Federal Reserve officials have countered with a somewhat hawkish stance, supporting Fed Chair Jerome Powell’s recent remarks.

The focus will be on US building permit figures, particularly following the previous day’s miss in the NAHB data. The continuation of Fed speakers today raises curiosity about whether they will further resist calls for easing monetary policy.

From a technical perspective, AUD/USD daily price action declined after Wednesday’s long upper wick close, now confronting the 0.6459 swing support. The Relative Strength Index (RSI) displays bearish/negative divergence, potentially indicating a further breakdown. A close below the 0.6459 swing low could bring the 50-day moving average into play for bearish momentum.

Key Support Levels

• 0.6459 (Swing Low)
• 0.6358 (50-day Moving Average)

IG Client Sentiment Data for AUD/USD shows mixed signals, with retail traders currently holding net LONG positions and 68% of traders on the long side.

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