- On Friday, AUD/USD dropped near its August lows at 0.6350, following the release of the US NFP report for November.
- The US jobs report showed a much stronger than expected increase in jobs.
- Rising bets for an early interest rate cut by the Reserve Bank of Australia added bearish pressure on the pair.
The AUD/USD pair experienced significant weakness on Friday, sinking near its August lows at 0.6350 after the release of the US Nonfarm Payrolls (NFP) report for November.
The data showed a much stronger than expected increase in jobs, while rising expectations for an interest rate cut by the Reserve Bank of Australia (RBA) added pressure to the Australian Dollar. Additionally, weaker than expected domestic GDP growth figures further dampened the outlook for AUD/USD.
Daily digest market movers: AUD/USD sinks near August lows after US NFP report
- US Nonfarm Payrolls for November came in at 227,000, far exceeding the previous 12,000 increase and the expected 200,000 figure.
- The Unemployment Rate ticked up to 4.2% from 4.1%.
- Monthly Average Hourly Earnings rose by 0.4%, above the expected 0.3%, steady from the previous 0.4%.
- University of Michigan Consumer Sentiment for December beat estimates at 74.0, improving from 71.8 previously.
- Five-year inflation expectations dropped to 3.1%, down from 3.2% in November.
- Rising bets for an early interest rate cut by the Reserve Bank of Australia contribute to bearish sentiment for AUD/USD.
AUD/USD technical outlook: Bearish outlook with RSI approaching oversold levels
The technical outlook for AUD/USD remains bearish as the pair continues to struggle near its August lows. The Relative Strength Index (RSI), a momentum oscillator that measures the speed and change of price movements, is approaching oversold conditions, signaling severe selling pressure. Similarly, the Moving Average Convergence Divergence (MACD), which tracks the relationship between two exponential moving averages, is also showing bearish dominance. However, these movements might have become overextended, so an upward correction may come.
Employment FAQs
Labor market conditions are a key element to assess the health of an economy and thus a key driver for currency valuation. High employment, or low unemployment, has positive implications for consumer spending and thus economic growth, boosting the value of the local currency. Moreover, a very tight labor market – a situation in which there is a shortage of workers to fill open positions – can also have implications on inflation levels and thus monetary policy as low labor supply and high demand leads to higher wages.
The pace at which salaries are growing in an economy is key for policymakers. High wage growth means that households have more money to spend, usually leading to price increases in consumer goods. In contrast to more volatile sources of inflation such as energy prices, wage growth is seen as a key component of underlying and persisting inflation as salary increases are unlikely to be undone. Central banks around the world pay close attention to wage growth data when deciding on monetary policy.
The weight that each central bank assigns to labor market conditions depends on its objectives. Some central banks explicitly have mandates related to the labor market beyond controlling inflation levels. The US Federal Reserve (Fed), for example, has the dual mandate of promoting maximum employment and stable prices. Meanwhile, the European Central Bank’s (ECB) sole mandate is to keep inflation under control. Still, and despite whatever mandates they have, labor market conditions are an important factor for policymakers given its significance as a gauge of the health of the economy and their direct relationship to inflation.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD looks at tariffs for further direction
AUD/USD reversed two daily upticks in a row and deflated below the 0.6300 support once again on Thursday in response to the firmer tone in the US Dollar and intense jitters around US tariffs.
EUR/USD meets initial support near 1.0820
EUR/USD lost ground for the second consecutive day, this time receding to the 1.0820 zone in line with further recovery in the Greenback and another pullback in German yields.
Gold now targets the $3,000 mark
Gold extended its rally on Thursday, hitting a fresh record past the $2,980 mark per troy ounce as escalating trade conflicts and mounting worries about global growth fueled intense safe-haven demand.
CZ denies rumors of seeking pardon from Trump
Binance founder Changpeng Zhao (CZ) denied reports on Thursday that claimed he is seeking an official pardon from President Donald Trump's administration.
Brexit revisited: Why closer UK-EU ties won’t lessen Britain’s squeezed public finances
The UK government desperately needs higher economic growth as it grapples with spending cuts and potential tax rises later this year. A reset of UK-EU economic ties would help, and sweeping changes are becoming more likely.
The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.