AUD/USD falls after inflation figures and robust US labor data, Trump’s threats

The AUD/USD declined to 0.6215 on Wednesday as renewed tariff threats from President-elect Donald Trump and strong US labor market data supported the US Dollar. Australian inflation data, while slightly better than expected, failed to lift the Aussie as traders stay cautious after of the release of the Federal Open Market Committee (FOMC) December meeting minutes.

Fundamental overview

The Aussie weakened after US labor market data, FOMC minutes, and local inflation data. The US Department of Labor reported that Initial Jobless Claims for the week ending January 4 dropped to 201,000, better than the market expectation of 218,000 and down from the prior week’s 211,000. Private sector employment also showed resilience, with 122,000 jobs added in December, according to ADP data, although this came below the expected 140,000.

Despite slower job growth, ADP Chief Economist Nela Richardson noted that healthcare created more jobs than any other sector in the second half of the year. The insured unemployment rate remained low at 1.2%, further emphasizing the labor market’s strength.

On the Australian side, inflation figures showed a slight uptick, with the Weighted CPI for November rising by 2.3% YoY, surpassing October’s 2.2%. However, the Trimmed Mean CPI eased to 3.2% from 3.5%, tempering expectations for a more hawkish RBA response. The dovish tone from the Reserve Bank of Australia, coupled with stronger US economic data, kept the AUD under pressure.

The FOMC minutes revealed cautious optimism among Federal Reserve officials. They highlighted solid GDP growth and low unemployment but noted that the disinflation trend had stalled in recent months. Policymakers emphasized the need for a gradual approach toward a neutral monetary policy stance and flagged risks from potential trade and immigration policy changes under the incoming administration.

Technical overview

The AUD/USD faced renewed selling pressure, declining to 0.6215 on Wednesday. The Relative Strength Index (RSI) is at 35, sharply declining and signaling increasing bearish momentum. The MACD histogram shows decreasing green bars, suggesting waning recovery attempts.

After briefly testing resistance at the 20-day Simple Moving Average (SMA), the pair turned south, reflecting the broader bearish trend. Immediate support lies at 0.6200, with a break below exposing 0.6180. On the upside, resistance is seen near 0.6250, but sustained gains remain unlikely without a significant shift in market sentiment or supportive data.