The AUD/USD pair increased to about 0.6930 on Thursday, influenced by a weakening US dollar following disappointing labor market data from the US. The Australian dollar gained as investors reassessed the likelihood of further interest rate hikes by the US Federal Reserve, though some lackluster trade data from Australia capped its gains.
The latest Nonfarm Employment Statistics (NFP) report revealed that only 57,000 jobs were added in June, significantly below the anticipated 110,000. Moreover, May’s figures were revised down from 172,000 to 129,000, which highlights a slowing hiring trend. Interestingly, despite this underwhelming job growth, the unemployment rate dipped from 4.3% to 4.2%. However, this drop was slightly offset by a fall in the labor force participation rate to 61.5%.
Wage data appeared stable as average hourly wages saw a month-over-month increase of 0.3%, reaching $37.64 in June, resulting in an annual growth rate of 3.5%. The average number of weekly hours worked remained steady at 34.3 hours, indicating that while labor demand may be slowing, it hasn’t collapsed entirely.
Additional labor statistics indicate that the job market is holding up pretty well. New claims for unemployment insurance for the week ending June 27 came in lower than expected at 215,000, although continuing claims saw a slight uptick to 1,814,000. This data suggests that layoffs are limited, even as companies seem to be adopting a more cautious hiring approach.
The disappointing employment figures led to a drop in US bond yields, putting pressure on the US dollar, which caused the dollar index to fall to approximately 100.70. Typically, lower US yields favor high-beta currencies like the AUD, supporting its recovery against the dollar despite Australia’s own weak data.
Short-term technical analysis:
On the 4-hour chart, AUD/USD is at 0.6930, backed by a 20-period simple moving average (SMA) near 0.6895 and several horizontal bottoms in the area, suggesting a slightly positive outlook. However, it remains below the 100-period SMA of 0.6972. An initial resistance point is at 0.6944, which could limit further upward movement ahead of the medium-term average. The Relative Strength Index (RSI), near 61, shows strong bullish momentum that might facilitate a move upward if 0.6944 is breached.
If the pair declines, initial support is at 0.6916, followed by 0.6903, the 20-period SMA at 0.6895, and a deeper level at 0.6883. Conversely, if it surpasses 0.6944, it would then target the 100-period SMA at 0.6972 as the next significant resistance level, and a sustained breakthrough here could lead to a more distinct bullish trend in the near future.
