In response to Thursday’s poor domestic jobs data, AUDUSD plunges to a new YTD low.
The AUDUSD pair plunges to a new bottom since November 2022, around the 0.6365 area. During Thursday’s Asian session as it continues its ongoing decline for the ninth straight day. The Australian Bureau of Statistics (ABS) stated that the economy lost a net 14,600 jobs in July. And the unemployment rate unexpectedly increased to 3.7%, causing the Australian Dollar (AUD) to fall by about 1% intraday. This follows lower Australian wage growth figures on Tuesday and essentially validates the Reserve Bank of Australia’s (RBA) decision to keep interest rates. On hold for the third straight month in September. It is important to remember that the RBA said that maintaining stable interest rates is the current default position in the minutes of the August meeting.
The hawkish view of the Fed continues to drive up US bond rates and strengthen the dollar.
In contrast, the July 25–26 FOMC policy meeting showed. That despite disagreements on the necessity for additional rate increases. Policymakers continued to place a high priority on the fight against inflation. Recall that the US CPI increased just little in July, but the US PPI increased marginally more than anticipated. Indicating that the fight to return inflation to the Fed’s 2% objective is still very much up in the air. Additionally, the incoming US macro data continue to an incredibly durable economy. Which supports the idea that interest rates will stay low for some time. Additionally, the markets are factoring in the potential of one another 25 basis point Fed rate hike before the end of the year. Which causes the US Treasury bond rates to increase even more.
The yield on the standard 10-year US government bond rises back toward the highest level.
Yield on the standard 10-year US government bond rises back toward the highest level. It has reached since 2008, which was last reached in October of the previous year, pushing the US Dollar (USD) to a two-month high. In addition, a generally softer outlook for the equities markets is seen to be another reason. That favors the dollar’s relative safe-haven status and deters investment in the risk-averse Australian dollar. In the background As anxieties about the effects of quickly rising borrowing costs increase in response to worsening economic circumstances in China. Investors’ desire for riskier assets is dampened. Recession fears are also fueled by these concerns. This in turn implies. That the AUDUSD pair will encounter the least amount of resistance on the downside.
However, for the time being at least, slightly oversold circumstances appear to prevent bearish traders. From putting further bets. However, any attempt at recovery is more likely to be restricted and sold into. Investors are now anticipating the US economic calendar. Which will include the publication of the weekly initial unemployment claims. As normal and the Philly Fed Manufacturing Index later in the early North American session. This will be important, coupled with the rates on US bonds. important role in affecting the USD price dynamics and giving the AUDUSD pair some momentum. In addition, traders will use the general risk attitude as a guide to seize short-term chances.
AUDUSD Technical Outlook
Technically, the most recent sustained breach below the 0.6600 level verified the creation of a bearish double-top pattern near the 0.6900 round number.
This in turn benefits bearish traders and strengthens the argument. Against the AUDUSD pair’s positive outlook. However, given that the Relative Strength Index (RSI) on the daily chart has deviated below the 30 level. It is recommended to hold off on preparing for any more losses until after some sort of short-term consolidation or a moderate comeback.
However, any significant return above the 0.6400 level is likely to encounter resistance. A new supply and fade out pretty rapidly close to the last YTD low. In the range of 0.6455 to 0.6460. This ought to serve as a formidable barrier for spot prices. And should it be overcome, it might spark a rally for short-covering and allow them to retake the psychological level of 0.6500.
On the other hand, the low from the Asian session, around the area of 0.6355, currently appears to be protecting the immediate downside. The downside objective of the bearish double-top pattern, the 0.6300 level, will be made visible by some follow-through selling. Following that is the 0.6270 region, or the November 2022 low, below which the AUDUSD pair may make an attempt at the 0.6200 round number.
