AUD/USD Forecast: RBA’s Pause Likely After Downbeat Jobs

  • Australia experienced a decline in employment in April.
  • Australia’s jobless rate rose to a three-month high of 3.7%.
  • Investors are now expecting a pause in RBA rate hikes next month.

Today’s AUD/USD forecast is bearish. Australia experienced a surprise decline in employment in April following two months of significant gains. This decrease in employment and a slight increase in the jobless rate suggests that the previously robust labor market might be cooling down. As a result, the argument for a temporary halt in interest rate hikes next month becomes stronger.

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As per the Australian Bureau of Statistics, the net employment figure dropped by 4,300 in April compared to a revised increase of 61,100 in March. This decline was contrary to market expectations of a rise of 25,000. 

Additionally, the jobless rate rose to a three-month high of 3.7%, deviating from the previous near 50-year low of 3.5%. Analysts had anticipated no change in the jobless rate. However, there was a 2.6% increase in hours worked during the month.

In response to this news, the local currency, the Australian dollar, depreciated by 0.4% to $0.6630. 

The Reserve Bank of Australia has taken significant measures to increase interest rates by a substantial 375 basis points to reach a level not seen in 11 years at 3.85%. This includes a surprise rate hike earlier this month, driven by concerns about potential inflationary pressures.

Market participants have become more convinced of a potential pause in interest rate hikes next month. However, they are also factoring in some likelihood of a move in August or September.

AUD/USD key events today

Investors will receive several economic releases from the US, including the initial jobless claims, the Philadelphia Fed manufacturing index, and the existing home sales.

AUD/USD technical forecast: Bears threatening 0.6650 breakout

AUD/USD technical forecast chart

On the charts, the AUD/USD downtrend is developing. The price might soon break below the 0.6650 support level to make a lower low. The bearish bias is strong because the price trades below the 30-SMA, respecting it as resistance. Additionally, the RSI supports bearish momentum trading below 50.

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A break below the 0.6650 support level will allow bears to retest the next support at 0.6576. The bearish bias will remain strong if the price keeps making lower lows and highs.

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