Aussie drops briefly after jobs report

AUD/USD fell almost 100 points in the Asian session but recovered and is trading in positive territory.

Australian labor market remains strong

Australia released the September jobs report earlier on Thursday, which indicated the labor market remained robust. The economy added 13,300 full-time jobs, with a drop of 12,400 part-time jobs. This follows a superb gain of 55,000 jobs in August.

The strength of the domestic economy, particularly the labor market, contributed to rising inflation, forcing the Reserve Bank of Australia to continue raising rates. The RBA surprised markets with a small rate hike of 0.25% at its October meeting, which was weaker than expected. At the meeting, the RBA noted that inflation remains too high, but the modest rate hike is in line with the central bank’s projection that inflation will peak in early 2023. The RBA meets on 1 november.st, with the publication of the September inflation report a few days before. Inflation data will likely be a major factor in the RBA’s rate decision.

The Australian dollar has had a hard time. Since August 1, AUD/USD has plunged 550 points as risk sentiment took a hit and aggressive Federal Reserve tightening boosted the US dollar. China’s economy is struggling and the escalation of the Ukrainian conflict, with no end in sight, has undermined appetite for risky currencies like the Australian dollar. While the Fed is expected to remain aggressive for the remainder of 2023 and China and Ukraine are likely to remain hot spots, there is room for the Aussie to continue heading south.

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AUD/USD technical

  • AUD/USD tested support at 0.6250 earlier in the day. The next support level is 0.6121
  • There is resistance at 0.6331 and 0.6460

This article is for general information purposes only. It is not investment advice or a solution for buying or selling securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for everyone. You could lose all your deposited funds.

Kenny Fisher

A highly experienced financial markets analyst specializing in fundamental analysis, Kenneth Fisher’s daily commentary covers a wide range of markets including forex, equities and commodities. His work has been published in several major online financial publications, including Investing.com, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.

Kenny Fisher

Kenny Fisher

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