The Australian Dollar (AUD) extended its decline against the US Dollar (USD) on Friday, marking its third consecutive daily loss. AUD/USD remains subdued as the Greenback finds support from upbeat US labor market data and the Federal Reserve’s (Fed) cautious yet firm policy outlook.
Aussie pressured by weak jobs report
Australia’s employment data disappointed markets, showing a seasonally adjusted job loss of 5.4K in August, compared with a revised 26.5K gain in July and expectations for a 22K increase.
The unemployment rate held steady at 4.2%, broadly in line with forecasts. Despite the soft data, the Aussie found some support as markets downplayed the likelihood of aggressive Reserve Bank of Australia (RBA) easing. Current pricing reflects only a 20% chance of a rate cut in September, while November odds stand at 70%, with above-target inflation keeping policymakers cautious.
US dollar supported by Fed and data
The US Dollar Index (DXY) hovered near 97.40 during Asian hours, buoyed by labor market resilience and Fed guidance. US Initial Jobless Claims fell to 231K for the week ending September 13, beating expectations of 240K and down from the prior week’s revised 264K. Continuing Claims also dropped by 7K to 1.920 million.
The Fed earlier this week delivered a 25 basis point (bps) rate cut—the first of the year—and signaled a further 50 bps of easing before year-end, slightly above June’s projections. Chair Jerome Powell underscored labor market weakness and tariff-related inflation risks, affirming a gradual, data-dependent approach.
Chinese data adds to sentiment
China’s August Retail Sales grew 3.4% year-over-year (YoY), missing expectations of 3.8%, while Industrial Production expanded 5.2%, below forecasts of 5.8%. The National Bureau of Statistics (NBS) described overall economic conditions as stable but flagged external headwinds and domestic demand challenges.
The data reinforced market concerns over global growth, weighing indirectly on the Aussie given Australia’s close trade links with China.
Technical outlook: AUD/USD tests key supports
AUD/USD trades near 0.6610, having slipped below the nine-day Exponential Moving Average (EMA). The pair remains within an ascending channel on the daily chart, preserving a broader bullish bias, but short-term momentum has weakened. Initial support lies near 0.6600 at the channel’s lower boundary.
A break below could expose the 50-day EMA at 0.6546. On the upside, reclaiming the nine-day EMA at 0.6623 would improve near-term momentum, opening the path toward the 11-month high at 0.6707 and the channel’s upper boundary near 0.6720.
