The Australian dollar has edged lower on Thursday. AUD/USD is trading at 0.6674 in the North American session, up 0.14% on the day. The Aussie didn’t show much reaction to today’s solid Australian employment report.
Australian employment beats forecasts
Australia’s economy has been slowing but the May employment report indicated that the labor market remains robust despite the uncertain economic landscape. The economy added 39.7 thousand jobs, above the revised gain of 37.4 thousand in April and the market estimate of 30 thousand. Full-time employment surged with a gain of 41.7 thousand, after two soft months. The unemployment rate dipped to 4.0%, down from 4.1%.
Today’s employment report is the final tier-1 event before the Reserve Bank of Australia meets on June 14th. The RBA has kept rates unchanged at 4.35% for six straight times and is expected to hold rates again next week. The central bank remains concerned about inflation, which has proven to stubborn and rose unexpectedly in April to 3.6%, up from 3.5%.
The Reserve Bank remains hawkish and has warned that it could raise rates if inflation continued to rise. A rate hike is an unlikely scenario but the message from the RBA is that inflation is too high and rate cuts will be delayed, perhaps until early 2025.
US inflation lower than expected
US inflation decelerated in May, raising hopes that inflationary pressures will continue to decline. The headline figure fell from 3.4% to 3.3% and core CPI dropped to 3.4%, down from 3.6%. The inflation release did not have a significant impact on rate cut expectations, with the markets currently pricing in quarter-point cut in September at 57%, according to the CME’s FedWatch.
AUD/USD Technical
- AUD/USD tested support at 0.6655 earlier. Below, there is support at 0.6605
- 0.6713 and 0.6763 are the next resistance lines
