AUDUSD Slumped to four-month low, investors brace for US NFP

AUDUSD has retreated to a four-month low of 0.6563.

In the Asian session, the AUDUSD pair hit a new four-month low of 0.6563. As Australian currency is under intense pressure as the US Dollar Index (DXY) recovers from a fall to approximately 105.13.

The Australian Dollar is struggling to find its footing as confidence about China’s economic resurgence fades.

Although the USD Index’s rebound move is not strong enough, and the Australian Dollar is struggling to find its footing as optimism about China’s economic recovery fades and the Reserve Bank of Australia (RBA) believes the existing monetary policy is tight enough to bring down sticky inflation.

The Dollar Index is battling to break through 105.35. S&P500 and futures have firmly extended losses. As US President Joe Biden’s greater tax burden to help the blue-collar portion has discouraged investors. As US Vice President Joe Biden recommended raising the corporate tax from 21% to 28%. Furthermore, wealthy investors must now pay substantial taxes. Because of massive sell-off in the 500-stock index of the United States paints a bleak picture of the market.

The unemployment rate in the United States is likely to stay at historically low levels.

Nevertheless, demand for US government bonds is increasing as investors become more dubious of the US labor market following a surprising increase in Initial Jobless Claims on Thursday. A 11% increase in  Jobless claims, the biggest in five months, but suggests that the American labor market is becoming more challenging. Furthermore, Reuters reported a fourfold scheduled layoff, indicating that labor market strength is fading.

US Nonfarm Payrolls (NFP) data provide clarity into the state of the US labor market. But According to estimates, the world’s largest economy added 203K new jobs in February, a decrease from the 517K added in January. And unemployment rate is predicted to stay around 3.4% for the  future.