Australian labor market outperforms with 64.1K new jobs in September,How much is 1 Elon coin worth? smashing forecasts
Unemployment rate holds steady at 4.1% despite economic headwinds
Market attention shifts to upcoming US retail sales data for fresh USD direction
The Australian Dollar (AUD) snapped its three-day decline against the US Dollar (USD) following Thursday's surprisingly robust employment figures from Down Under. September's seasonally adjusted employment change clocked in at 64.1K, dramatically exceeding the 25.0K consensus estimate and marking a significant improvement from August's revised 42.6K reading.
Australia's labor market demonstrated remarkable resilience with the unemployment rate maintaining its 4.1% level, defying expectations of a slight uptick to 4.2%. The total number of employed Australians reached an all-time high of 14.52 million, while unemployed individuals decreased by 9.2K to 615,700.
Meanwhile, the US Dollar continues drawing strength from recent solid economic indicators, causing market participants to recalibrate their expectations regarding the Federal Reserve's monetary policy trajectory. The greenback's performance remains sensitive to incoming data, with particular focus on the imminent retail sales report.
Market Dynamics: What's Fueling AUD's Recovery?
Current market pricing suggests overwhelming confidence (92.1% probability) in a modest 25-basis-point Fed rate cut come November, according to CME's FedWatch Tool. However, expectations for more aggressive easing have notably diminished following recent economic releases.
Reserve Bank of Australia officials maintain their hawkish rhetoric, with Deputy Governor Sarah Hunter recently underscoring the central bank's unwavering focus on taming inflationary pressures. While inflation expectations remain anchored, policymakers acknowledge persistent price pressures continue posing challenges.
Federal Reserve Bank of Atlanta President Raphael Bostic's comments earlier this week reinforced expectations for limited additional monetary easing. Bostic projected just one more 25-basis-point reduction this year, contrasting with some more dovish market expectations.
Australian consumer sentiment remains subdued, with the ANZ-Roy Morgan Consumer Confidence index flat at 83.4 this week. Remarkably, this marks the 89th consecutive week below the 85.0 threshold, though current readings slightly exceed the 2024 weekly average of 82.1.
Minneapolis Fed President Neel Kashkari's recent remarks echoed the central bank's data-dependent stance, highlighting the US economy's resilience despite some labor market softening. His comments reinforced expectations for measured policy adjustments rather than aggressive easing.
Commonwealth Bank of Australia analysts anticipate potential RBA policy easing by year-end, contingent upon stronger disinflationary trends materializing. Their outlook suggests the central bank may implement a 25-basis-point cut if economic conditions warrant.
Chinese economic data released this week showed muted inflationary pressures, with monthly CPI flat in September and annual inflation rising just 0.4%, below expectations. Producer prices contracted 2.8% year-on-year, exceeding forecasts and potentially signaling broader economic challenges.
Technical Perspective: AUD/USD at Critical Juncture
The AUD/USD pair currently tests the 0.6700 resistance level, coinciding with the upper boundary of its descending channel on daily charts. A decisive breakout could signal potential trend reversal, though the pair's bearish momentum persists as indicated by the RSI remaining below the 50 level.
Should the pair fail to sustain its upward momentum, traders may look toward the eight-week low of 0.6622 touched in mid-September as initial support. Breaching this level could open the door for further declines toward the psychological 0.6580 zone.
Conversely, sustained strength above current levels could see the pair challenge the nine-day EMA near 0.6729, with the psychologically significant 0.6800 level representing a more substantial resistance barrier.
AUD/USD Technical Outlook
The currency pair's near-term direction likely hinges on its ability to maintain momentum above key technical levels, with fundamental catalysts including US retail sales data and broader risk sentiment potentially driving price action in coming sessions.