The Australian Dollar (AUD) extended losses against the US Dollar (USD) on Thursday, weighed down by weaker domestic labor data and a firmer Greenback supported by robust US inflation projections. AUD/USD traded near 0.6640 during the Asian session, retreating further from its recent 11-month highs.
Australian jobs data disappoints
Australia’s seasonally adjusted Employment Change fell by 5.4K in August, following July’s revised 26.5K increase and well below the market expectation of a 22.0K gain. The Unemployment Rate, however, held steady at 4.2%, in line with forecasts.
The softer employment figures come as the Reserve Bank of Australia (RBA) signals that inflation is close to target. Assistant Governor Sarah Hunter said earlier this week that risks to the outlook are balanced, stressing the importance of a forward-looking approach given the lagged effect of monetary policy. Market pricing now reflects a 70% chance of the RBA holding rates steady in September, supported by a strong July trade surplus, solid Q2 GDP, and rising consumer inflation expectations.
Fed rate cut and US data support the dollar
The Federal Reserve (Fed) delivered its first rate cut of the year on Wednesday, lowering the funds rate by 25 basis points and projecting an additional 50 bps of easing before year-end. Fed Chair Jerome Powell highlighted mounting labor market weakness as the key reason for easing after a long policy pause, while noting persistent inflation risks tied to tariffs.
The US Dollar Index (DXY) traded around 97.10, underpinned by stronger-than-expected US data. Retail Sales rose 0.6% month-over-month in August, beating consensus at 0.2%, while the Control Group and ex-Autos components both advanced 0.7%. The firmer figures reinforced the view of resilient consumer demand despite policy easing.
Mixed signals from China
China, Australia’s largest trading partner, reported mixed August activity data. Retail Sales grew 3.4% year-over-year, falling short of expectations, while Industrial Production increased 5.2%, also below forecasts. The National Bureau of Statistics (NBS) acknowledged challenges in external demand but pointed to steady domestic conditions and potential for a rebound in prices.
AUD/USD technical outlook
Technically, AUD/USD remains in an ascending channel on the daily chart, supporting a constructive bias in the near term. The pair is holding above the nine-day Exponential Moving Average (EMA) at 0.6632, reinforcing short-term bullish momentum.
On the upside, resistance lies at the psychological 0.6700 level, followed by the 11-month high of 0.6707 and the upper boundary of the ascending channel near 0.6720. On the downside, initial support is seen at the nine-day EMA, with further downside risk toward the channel’s lower boundary at 0.6590. A break below that zone would shift the bias bearish, exposing the 50-day EMA around 0.6544.
