- Australia’s employment increased by 58,200 in July.
- The likelihood of an RBA rate cut in November dropped from 55% to 45%.
- The US dollar was on the back foot after US consumer inflation figures.
The AUD/USD forecast points North as the Australian dollar rises after a surprise jump in Australia’s jobs. However, the unemployment rate also increased, showing a mixed picture. Meanwhile, the US dollar remained frail after data showed US consumer inflation increasing moderately in July.
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On Thursday, Australia released its monthly employment report, showing a bigger-than-expected job increase. Employment increased by 58,200 when economists had expected a 20,000 gain. The jump shows a resilient labor market that will likely keep the Reserve Bank of Australia cautious about rate cuts.
However, the report also showed that the unemployment rate increased to 4.2%, above expectations of 4.1%. Nevertheless, rate cut expectations fell. Notably, the likelihood of an RBA rate cut in November dropped from 55% to 45%.
Australia’s labor market has remained strong, keeping underlying inflation high. If this trend continues, the RBA will keep delaying rate cuts. The central bank has paused at 4.35% and might keep holding this rate until next year.
Meanwhile, the US dollar was on the back foot after US consumer inflation figures. The CPI showed a moderate annual increase of 2.9%. Meanwhile, on a monthly basis, it rose by 0.2%. As a result, it solidified expectations for a Fed rate cut in September. However, markets are now expecting a smaller 25 bps rate cut. Notably, the likelihood of a 25 bps cut rose to 64%, while that of a 50 bps cut fell to 36%. The next high-impact report is on retail sales.
AUD/USD key events today
- US core retail Sales m/m
- US retail sales m/m
- US unemployment claims
AUD/USD technical forecast: Bulls manage to stay above 30-SMA
On the technical side, the AUD/USD price is pushing off the 30-SMA support, indicating a bullish trend. At the same time, the RSI has stayed above 50 in bullish territory. Initially, the price pulled back to retest the SMA. If bears were strong enough, they would have reversed the trend.
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However, bulls resurfaced with a strong engulfing candlestick that could lead to higher prices. The next target for this uptrend is at the 0.6700 resistance level. This trend will continue as long as the price trades above the 30-SMA.
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Saqib Iqbal
