AUD/USD Price Forecast: Aussie jobs data-led recovery stalls ahead of trend-channel barrier
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UPGRADE- AUD/USD stages a goodish recovery from the YTD low on stellar Australian jobs data.
- Investors scaled back their expectations for an early RBA rate cut, which lifts the AUD.
- Bets for another Fed rate cut in December cap the USD and further support the major.
The AUD/USD pair gains strong positive traction following the release of the upbeat Australian employment data on Thursday and moves away from the year-to-date touched the previous day. The Australian Bureau of Statistics (ABS) reported a stunning drop in the Unemployment Rate, to 3.9% in November against consensus estimates for an uptick to 4.2% from 4.1% in the prior month. Additional details revealed that the number of employed people rose more than expected, by 35.6K on the back of a solid jump in full-time jobs. This suggests a re-tightening of labour market conditions and weakens the case for a February interest rate cut by the Reserve Bank of Australia (RBA), which, in turn, provides a goodish lift to the Australian Dollar (AUD).
Meanwhile, China pledged to implement more proactive fiscal measures and moderately looser monetary policy in 2025 as part of the government's efforts to boost domestic consumption. This turns out to be another factor that benefits the Aussie, which, along with a modest US Dollar (USD) downtick, further contributes to the AUD/USD pair's intraday move up. The US consumer inflation data released on Wednesday reinforced expectations that the Federal Reserve (Fed) will deliver a third consecutive rate cut at the end of the December policy meeting next week, which caps the recent USD rise to a two-week high. The official data, however, indicated that the progress in lowering inflation toward the Fed's 2% target has virtually stalled.
In fact, the US Bureau of Labor Statistics (BLS) reported that the headline Consumer Price Index rose 0.3% in November, marking the largest gain since April, and the yearly rate accelerated to 2.7%. Meanwhile, the core gauge, which excludes volatile food and energy prices, increased 0.3% during the reported month and was up 3.3% as compared to the same time period last year. This, along with expectations that US President-elect Donald Trump's expansionary policies, will boost inflation, suggests that the US central bank will adopt a cautious stance on cutting interest rates. This, in turn, pushes the yield on the benchmark 10-year US government bond to a two-week high and should continue to act as a tailwind for the Greenback.
Apart from this, persistent geopolitical risks stemming from the protracted Russia-Ukraine war and Middle East tensions help limit the downside for the safe-haven buck. Moreover, concerns that Trump's tariff plans could trigger a second wave of the US-China trade war could keep a lid on the AUD/USD pair. Traders now look forward to the US economic docket – featuring the release of the Producer Price Index (PPI) and the usual Weekly Initial Jobless Claims – for short-term impetus later during the North American session. The focus, however, will remain glued to the outcome of a two-day FOMC meeting on December 18, which will influence the near-term USD price dynamics and determine the near-term trajectory for the currency pair.
Technical Outlook
From a technical perspective, the recent decline witnessed over the past two weeks or so, along a descending channel points to a well-established short-term downtrend. Moreover, oscillators on the daily chart – though have recovered slightly from lower levels – are still holding in negative territory and suggest that the path of least resistance for the AUD/USD pair remains to the downside. Hence, any subsequent move up is more likely to confront a stiff barrier and remain capped near the top end of the channel, currently pegged near the 0.6440 area. A sustained move beyond, however, would negate the negative bias and trigger a short-covering rally towards the 0.6500 psychological mark. The momentum could extend further towards the 0.6540-0.6550 horizontal support breakpoint, now turned resistance.
On the flip side, the Asian session low, around the 0.6365 region, now seems to protect the immediate downside ahead of the 0.6335 area, or the YTD low, nearing the ascending trend-channel support. Some follow-through selling, leading to a subsequent slide below the 0.6300 mark, will confirm a fresh bearish breakdown. The AUD/USD pair might then slide below the 2023 yearly low, around the 0.6270 zone, towards the 0.6200 round figure en route to the 2022 low, around the 0.6170 region.
AUD/USD 4-hour chart
- AUD/USD stages a goodish recovery from the YTD low on stellar Australian jobs data.
- Investors scaled back their expectations for an early RBA rate cut, which lifts the AUD.
- Bets for another Fed rate cut in December cap the USD and further support the major.
The AUD/USD pair gains strong positive traction following the release of the upbeat Australian employment data on Thursday and moves away from the year-to-date touched the previous day. The Australian Bureau of Statistics (ABS) reported a stunning drop in the Unemployment Rate, to 3.9% in November against consensus estimates for an uptick to 4.2% from 4.1% in the prior month. Additional details revealed that the number of employed people rose more than expected, by 35.6K on the back of a solid jump in full-time jobs. This suggests a re-tightening of labour market conditions and weakens the case for a February interest rate cut by the Reserve Bank of Australia (RBA), which, in turn, provides a goodish lift to the Australian Dollar (AUD).
Meanwhile, China pledged to implement more proactive fiscal measures and moderately looser monetary policy in 2025 as part of the government's efforts to boost domestic consumption. This turns out to be another factor that benefits the Aussie, which, along with a modest US Dollar (USD) downtick, further contributes to the AUD/USD pair's intraday move up. The US consumer inflation data released on Wednesday reinforced expectations that the Federal Reserve (Fed) will deliver a third consecutive rate cut at the end of the December policy meeting next week, which caps the recent USD rise to a two-week high. The official data, however, indicated that the progress in lowering inflation toward the Fed's 2% target has virtually stalled.
In fact, the US Bureau of Labor Statistics (BLS) reported that the headline Consumer Price Index rose 0.3% in November, marking the largest gain since April, and the yearly rate accelerated to 2.7%. Meanwhile, the core gauge, which excludes volatile food and energy prices, increased 0.3% during the reported month and was up 3.3% as compared to the same time period last year. This, along with expectations that US President-elect Donald Trump's expansionary policies, will boost inflation, suggests that the US central bank will adopt a cautious stance on cutting interest rates. This, in turn, pushes the yield on the benchmark 10-year US government bond to a two-week high and should continue to act as a tailwind for the Greenback.
Apart from this, persistent geopolitical risks stemming from the protracted Russia-Ukraine war and Middle East tensions help limit the downside for the safe-haven buck. Moreover, concerns that Trump's tariff plans could trigger a second wave of the US-China trade war could keep a lid on the AUD/USD pair. Traders now look forward to the US economic docket – featuring the release of the Producer Price Index (PPI) and the usual Weekly Initial Jobless Claims – for short-term impetus later during the North American session. The focus, however, will remain glued to the outcome of a two-day FOMC meeting on December 18, which will influence the near-term USD price dynamics and determine the near-term trajectory for the currency pair.
Technical Outlook
From a technical perspective, the recent decline witnessed over the past two weeks or so, along a descending channel points to a well-established short-term downtrend. Moreover, oscillators on the daily chart – though have recovered slightly from lower levels – are still holding in negative territory and suggest that the path of least resistance for the AUD/USD pair remains to the downside. Hence, any subsequent move up is more likely to confront a stiff barrier and remain capped near the top end of the channel, currently pegged near the 0.6440 area. A sustained move beyond, however, would negate the negative bias and trigger a short-covering rally towards the 0.6500 psychological mark. The momentum could extend further towards the 0.6540-0.6550 horizontal support breakpoint, now turned resistance.
On the flip side, the Asian session low, around the 0.6365 region, now seems to protect the immediate downside ahead of the 0.6335 area, or the YTD low, nearing the ascending trend-channel support. Some follow-through selling, leading to a subsequent slide below the 0.6300 mark, will confirm a fresh bearish breakdown. The AUD/USD pair might then slide below the 2023 yearly low, around the 0.6270 zone, towards the 0.6200 round figure en route to the 2022 low, around the 0.6170 region.
AUD/USD 4-hour chart
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