AUD/USD prods four-day downtrend below 0.6800 amid anxiety ahead of Australia employment data

• AUD/USD portrays cautious mood by struggling to extend the latest south-run after refreshing weekly low.
• Market sentiment, Australia data jostle with US Dollar rebound to weigh on AUD/USD.
• China news, pre-data anxiety also weigh on Aussie pair due to its risk-barometer status.
• Australia employment for June, PBoC Interest Rate Decision will be crucial for fresh impulse.

AUD/USD remains on the back foot at the lowest levels in a week, making rounds to 0.6770-75 after a four-day losing streak during the early hours of Thursday’s Asian session. In doing so, the risk-barometer pair aptly portrays the market’s cautious mood ahead of Australia’s top-tier employment data, as well as the mixed risk catalysts from China and the US.

Today’s Australian employment data becomes more important as the latest Monetary Policy Meeting Minutes from the Reserve Bank of Australia (RBA) showed the policymakers’ readiness to lift the rates if needed, after pausing the interest rates in the last meeting. Additionally, the downbeat Aussie inflation has had mixed clues and the wage price pressure remains almost static, which in turn suggests the need for restrictive monetary policy and hence can push the RBA toward lifting the rates if today’s Aussie job numbers rally.

Elsewhere, Australia’s CB Leading Index improved to 0.1% increase in June from a downwardly revised -0.3% while the Westpac Leading Index also rose to 0.12 for the said month from -0.27%.

On the other hand, US Building Permits for June marked a contraction of 3.7% versus the previous increase of 5.6% (revised) whereas the Housing Starts also slumped 8.0% for the said period from 15.7% revised prior.

It’s worth noting that the previously released slower growth of the US Retail Sales for June contrasted with promising details to defend the Federal Reserve in keeping the rates higher for longer, as well as help in announcing 0.25% rate hike in July. The same triggered the US Dollar’s corrective bounce off the 15-month low on Tuesday and helped defend the recovery on Wednesday despite downbeat US housing data.

Talking about the risks, China headlines have been mixed as the policymakers’ readiness for more stimulus joins an absence of additional tussles between the Washington and Beijing to raise hopes of placating terms among the world’s top two economies. However, pessimism at Chinese reality markets and recently downbeat statistics from the dragon nation flag fears of witnessing slow economic recovery in the key global player, which in turn weighs on the AUD/USD price due to Australia’s ties with China.

Above all, the US Dollar’s ability to remain firmer for the second consecutive day, despite witnessing downbeat US housing data and concerns about Fed policy pivot keeps the AUD/USD bears hopeful.

Moving on, AUD/USD traders should pay attention to June employment clues and the People’s Bank of China (PBoC) Interest Rate Decision for clear directions. That said, the PBoC is expected to keep the rates unchanged while the anticipated easing in the headline Aussie Employment Change, as well as likely no change in the Unemployment Rate, may keep weighing on the Aussie pair amid a lack of optimism in the Asia-Pacific zone and firmer US Dollar.

Also read: Australian Employment Preview: Good news could be bad news for the RBA

Technical analysis

AUD/USD pair’s sustained downside break of horizontal support stretched from April 2023, around 0.6780, allows AUD/USD to aim for the 200-DMA support of around 0.6715.