On the back of offered US Dollars and dismal ISM data, the AUD/USD spikes above 0.6850.

Market Analytics and Considerations

Key Notes

• The dismal US ISM Services report, which decreased to its lowest level since 2020, caused the AUD/USD to rise.
• Although wage increases stalls, the US economy gained additional jobs than anticipated, aiding the Federal Reserve’s efforts to control inflation.
• Reiterating the necessity to reduce inflation, Fed members reaffirmed their commitment to their current course of action.

Just after revelation of critical economic data in the United States (US), which, while promising, did not support the USD, the Australian Dollar (AUD) climbed versus the US Dollar (USD). In furthermore, a services PMI survey fell into recessionary area, escalating fears of a US recession. The AUD/USD is selling at 0.6866, approximately 40 pip just above 200-day Exponential Moving Average

US economic reports were mixed, supporting the AUD/USD.

The US job market figures for Dec. presented a mixed picture. Though the economy creating 223K new jobs, more than expected at 200K, worries that wage inflation will indeed continuing to be more persistent decreased. Although the average hourly wage increased month over month by 0.3%, it dipped yearly from 5.0percentage points to 4.6%. The Fed’s officials likely welcome the deceleration because they believe wage pressures are among the things that keeps inflation above its 2percentage – point objective.

Following the news, the AUD/USD traded slightly better and was headed towards to the 0.6800 handle. But weaker-than-anticipated ISM Services figures and a decline in US Factory Orders gave the AUD/USD currency pairing additional boost, pushing its advances to a two-day top of 0.6849.

According to statistics issued on Friday, the ISM Services PMI unexpectedly declined to 49.6 vs. 55 estimates, its lowest reading since May 2020, and lagged November’s 56.5 rise. Results of the PMI underneath the 50-line indicate shrinkage.

In addition, news media outlets kept reporting on Fed speakers. Raphael Bostic, president of the Atlanta Fed, had previously indicated that the employment report for Dec did not change his estimate of the state of the economy and emphasized the necessity to “remain the path.” However, contradicting new reports, Federal Reserve Governor Lisa D. Cooks declared that inflation is “much too excessive” and of “deep concern.”

Building Permits, the publication of the Monthly Consumer Price Index (CPI), Retail Sales, and the Trade Balance are among the statistics for Australia that will be released the following week. The Consumer Price Index (CPI), unemployment claims, and the University of Michigan (UoM) Consumer Sentiment are all on the US front’s calendar.

Key Technical Levels to Monitor