AUD/USD renews weekly bottom around 0.6890 amid poor Aussie employment, downbeat yields

• AUD/USD bears poke previous monthly top during a two-day downtrend from five-month high.
• Australia jobs report bolstered case for slower rate hike from the RBA.
• US Treasury bond yields renew multi-day low even as downbeat data, hawkish Fedspeak renew recession fears.

AUD/USD holds lower ground near the intraday low near 0.6890 as the previous monthly top probes the bears during the second loss-making day amid early Thursday in Europe. In doing so, the Aussie pair extends the previous day’s pullback from the highest levels since August 2022 amid a downbeat Australian employment report for August, as well as growing fears of recession.

Australia’s headline Employment Change turned negative on a seasonally adjusted basis, printing -14.6K figure versus 22.5K expected and 64K prior. Further, the Unemployment Rate also rose to 3.5% compared to the market consensus of witnessing no change in the 3.4% previous readings.

Elsewhere, softer prints of the US data and hawkish Fed talks renew economic slowdown fears and weigh on the sentiment, which in turn exert downside pressure on the risk-barometer AUD/USD pair.

That said, US Retail Sales marked the biggest slump in a year while the Producer Price Index also dropped to the lowest level in six months during December. Further, St. Louis Federal Reserve's President James Bullard said US interest rates have to rise further to ensure that inflationary pressures recede. On the same line, President of the Federal Reserve Bank of Cleveland Loretta Mester praised the Fed’s actions to tame inflation. Further, Kansas City Fed President Esther George mentioned that the central bank must restore price stability, "that means returning to 2% inflation." Recently, Dallas Federal Reserve President Lorie Logan supported a slower rate hike pace but also mentioned possibly a higher stopping point.

As the AUD/USD bears cheer the recession woes in the US, as well as fears of a less hawkish Reserve Bank of Australia (RBA) due to the downbeat Aussie jobs report, the pair traders ignore upbeat concerns surrounding China. Recently, Gita Gopinath, the first Deputy Managing Director of the International Monetary Fund (IMF) said, “China could see a sharp recovery in economic growth from the second quarter onwards based on current infection trends after the dismantling of most COVID-19 restrictions.”

Amid these plays, the S&P 500 Futures and Australia’s ASX 200 print mild losses while the US 10-year Treasury yields refresh a four-month low and the two-year counterpart drops to the lowest levels since early October at the latest.

Looking forward, AUD/USD traders should pay attention to the risk catalysts, mainly the central bank speakers amid a light calendar, for clear directions as bears struggle to retake control.

Technical analysis

The AUD/USD pair’s confirmation of a two-week-old rising wedge keeps the bears hopeful of witnessing a fresh monthly low.

Also read: AUD/USD Price Analysis: Bears cheer rising wedge confirmation around 0.6900