- AUD/USD continues to slide
- Australian employment change expected to slow on Thursday
The Australian dollar is down sharply on Wednesday. In the North American session, AUD/USD is trading at 0.6774, down 0.55%.
For anyone who enjoys strong volatility, look no further than the Australian dollar. Last week, AUD/USD climbed 2.18%, as the US dollar sagged badly after the June inflation report surprised on the downside. The Australian dollar hasn’t been able to consolidate and has pared about half of those gains this week.
RBA will be keeping a close eye on the employment report
Australia releases the June employment report on Thursday. After a banner reading in May, when the economy added 75,900 jobs, the consensus stands at a modest 15,000. The unemployment rate is expected to remain at 3.6%.
The Reserve Bank of Australia would prefer weaker job numbers as it tries to beat down inflation. The labour market has been surprisingly resilient in the face of the central bank’s aggressive tightening, complicating the battle to curb inflation. The RBA has said that its decisions will be data-dependent, and inflation and employment numbers are critical to the RBA’s rate path in the coming months.
The central bank left rates alone at the meeting earlier this month and would like to extend the pause at the August 1st meeting. That, however, will require evidence that the economy is cooling and Thursday’s employment numbers will be a key factor in the RBA’s rate decision.
The next meeting is on August 1st, with the money markets pricing a rate hike at just 25%, according to the ASX RBA rate tracker. The RBA has abandoned forward guidance in favor of making rate decisions based on economic data, which could make next week’s employment report a game-changer as to whether the RBA pauses or hikes at the next meeting.
AUD/USD Technical
- AUD/USD is testing support at 0.6786. Below, there is support at 0.6676
- 0.6878 and 0.6947 are the next resistance lines
