CFD Trading Rate Australian Dollar vs US Dollar (AUDUSD)

The Australian Dollar (AUD) could continue to rise, but any advance is likely part of a higher range of 0.6745/0.6765. In the longer run, AUD must break and remain above 0.6765 before an advance to 0.6825 can be expected, UOB Group FX strategists Quek Ser Leang and Lee Sue Ann note.

An advance to 0.6825 can be expected

24-HOUR VIEW: “While AUD gained 0.70% (0.6752) yesterday, upward momentum has not increased much. Today, it could continue to rise, but any advance is likely part of a higher range of 0.6725/0.6765. In other words, AUD is unlikely to break clearly below 0.6725 or above 0.6745.” 1-3 WEEKS VIEW: “AUD dropped to 0.6622 last week and then rebounded. There has been a tentative buildup in momentum. From here, AUD must break and remain above 0.6765 before an advance to 0.6825 can be expected. The likelihood of AUD breaking clearly above 0.6765 will increase in the next few days as long as 0.6700 is not breached.”

• AUD/USD attracts some follow-through buyers and climbs to a nearly two-week high. 
• 50 bps Fed rate cut bets, and a positive risk tone undermines the USD, lending support. 
• Traders look to US Retail Sales data for some impetus ahead of the Fed on Wednesday. 

The AUD/USD pair gains traction for the second straight day on Tuesday – also marking the fourth day of a positive move – and climbs to a one-and-half-week high during the early part of the European session. Spot prices currently trade above mid-0.6700s, up around 0.15% for the day, as investors look to the outcome of a two-day Federal Open Market Committee (FOMC) meeting on Wednesday for a fresh directional impetus. 

Heading into the key central bank event risk, the US Dollar (USD) consolidates its recent heavy losses to the lowest level since July 2023 amid bets for an oversized 50 basis points interest rate cut by the Federal Reserve (Fed). This, along with the Reserve Bank of Australia's (RBA) hawkish outlook and a generally positive tone around the equity markets, turns out to be a key factor benefiting the risk-sensitive Aussie and lending some support to the AUD/USD pair. 

With the latest leg up, spot prices have now rallied nearly 150 pips from the vicinity of the very important 200-day Simple Moving Average (SMA) support, around the 0.6620 region, or a nearly four-week low touched last Wednesday. Moreover, the fundamental backdrop seems tilted in favor of the USD bears and suggests that the path of least resistance for the AUD/USD pair is to the upside. That said, concerns about a slowdown in China could act as a headwind. 

In fact, a string of downbeat Chinese data released over the weekend pointed to more economic weakness and challenges in reaching the official target of around 5% GDP growth rate in 2024. This, in turn, could act as a headwind for the China-proxy Australian Dollar (USD). Traders might also prefer to wait for more cues about the Fed's rate-cut path, warranting some caution before placing fresh bullish bets around the AUD/USD pair. 

Next on tap is the release of the US monthly Retail Sales figures, which, along with the US bond yields and the broader risk sentiment, will drive the USD demand and provide some impetus to the currency pair. The market reaction to the US macro data, meanwhile, is more likely to be limited as the focus remains glued to the crucial Fed policy decision. 

• AUD/USD gains to near 0.6750 as Fed big rate cut bets swell.
• US Jon Faust showed a preference for a 50 bps rate cut on Wednesday if officials plan for the same in the last quarter.
• Investors expect the Australian jobless rate to have remained steady at 4.2%.

The AUD/USD pair rises sharply to near 0.6750 in Monday’s European session. The Aussie asset surges at US Dollar’ expense as the latter faces a sharp selling pressure, with investors focusing on the Federal Reserve’s (Fed) monetary policy meeting, which is scheduled for Wednesday. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, tumbles below 100.70.

The Fed is almost certain to start reducing interest rates but traders remain divided over the likely interest rate cut size. Softer-than-expected United States (US) Producer Price Index (PPI) data for August and persistent concerns over slowing labor market conditions have recently prompted market expectations for the Fed to reduce interest rates by 50 basis points (bps) to 4.75%-5.00%.

According to the CME FedWatch tool, the probability for the Fed reducing interest rates by 50 bps has increased sharply to 57% from 30% a week ago.

Fed jumbo rate cut prospects have also been prompted after the interview of Jon Faust, a recent senior adviser to Fed Chairman Jerome Powell, to Wall Street Journal (WSJ) in which he comments indicated that the central bank should start the policy-easing cycle with 50 bps now rather than in November or December as expected by some officials, with current rates remaining far from their ultimate destination.

In the Aussie region, the Australian Dollar (AUD) will be influenced by the Employment data for August, which will be published on Thursday. The Unemployment Rate is estimated to have remained steady at 4.2%. Fresh payrolls are expected to come in at 25.5K lower than the prior release of 58.2K.

• AUD/USD trades with mild gains around 0.6705 in Monday’s early Asian session. 
• The two-day FOMC meeting ends Wednesday with an expected rate cut.  
• The Chinese Retail Sales and Industrial Production came in worse than expected.

The AUD/USD pair posts modest gains near 0.6705 during the early Asian session on Monday. The uptick of the pair is supported by the weakness of the US Dollar (USD). However, the concerns about the economic slowdown in China might cap the upside for the China-proxy Australian dollar (AUD). All eyes will be on the US Federal Reserve (Fed) interest rate decision on Wednesday. 

Markets are largely split on whether the US Fed will cut rates by 25 basis points (bps) to a range of 5.0% to 5.25% or by 50 bps at its upcoming monetary policy meeting. According to the CME FedWatch Tool, the markets have priced in nearly 49% probability of a Fed larger rate cut, a significant jump from a 28% chance one day prior. Investors will take more cues from the FOMC Press Conference for the outlook of the US interest rate. If Powell indicated to ease more aggressively, this could exert some selling pressure on the Greenback and create a tailwind for AUD/USD. 

On the other hand, the disappointing Chinese economic data released on the weekend might weigh on the Aussie as China is Australia's largest trading partner. Data released by the National Bureau of Statistics (NBS) on Saturday showed that Chinese Retail Sales rose 2.1% YoY in August from 2.7% in July, while Industrial Production increased 4.5% YoY in the same period versus 5.1% prior. Both figures came in below the market consensus. 

On Thursday, the Australian employment data will be released. The Reserve Bank of Australia (RBA) Assistant Governor (Economic) Sarah Hunter said last week that “the labor market is still tight relative to full employment.” and the RBA’s stance is that “further falls in vacancies can still occur alongside a relatively modest increase in the unemployment rate. The remarks support the RBA’s case against near-term rate cuts, which might lift the AUD against the USD. 
 

• AUD/USD falls to near 0.6700 as Aussie growth worries weigh on the Australian Dollar.
• Soft US PPI has renewed debate for potential Fed interest rate cut size.
• AUD/USD recovers from 38.2% Fibo retracement.

The AUD/USD pair corrects to near the round-level support of 0.6700 in Friday’s European session. The Aussie asset declines as the Australian Dollar (AUD) weakens amid growing worries over Australia’s economic growth due to the maintenance of high interest rates by the Reserve Bank of Australia (RBA).

Market experts worry that a long RBA hawkish interest rate stance could deteriorate labor market conditions. However, RBA officials continue to support maintaining their Official Cash Rate (OCR) higher as the battle against inflationary pressures is far from over.

Meanwhile, the US Dollar (USD) is also underperforming against its major peers as softer-than-expected United States (US) annual Producer Price Index (PPI) data for August has brought the debate over the likely interest rate cut to size by the Federal Reserve (Fed) back on the table. Market speculation for the Fed to start reducing interest rates aggressively from Thursday has strengthened. The CME FedWatch tool shows that the probability of the Fed reducing interest rates by 50 basis points (bps) to 4.75%-5.00% in September has increased sharply to 43%.

AUD/USD bounces back sharply after retracing 38.2% of the last swing high (plotted from August 5 low near 0.6350 to August 29 high of 0.6824) at 0.6643 on a daily timeframe. The asset has mildly corrected but is holding the key 20-day Exponential Moving Average (EMA), which trades around 0.6700.

The 14-day Relative Strength Index (RSI) oscillates in the 40.00-60.00 range, suggesting a sideways trend ahead.

The Aussie asset would witness a fresh upside move if it breaks above the September 6 high of 0.6767, which will drive the asset toward the round-level resistance of 0.6800 and the Year-To-Date (YTD) high of 0.6840.

On the flip side, a downside move below the weekly low of 0.6622 will drag the asset towards a 50% Fibonacci retracement at 0.6587, followed by an August 6 high of 0.6542.

AUD/USD daily chart

• AUD/USD struggles to gain strength despite the US Dollar corrects after the release of the US annual PPI report for August.
• Investors see the Fed reducing interest rates by 25 bps next week.
• Growing worries over Australian economic prospects have prompted the need for RBA rate cuts.

The AUD/USD pair strives for strong buying interest to extend its upside to near 0.6700 in Thursday’s North American session. The Aussie asset struggles to gain strength despite the release of the softer-than-expected United States (US) annual Producer Price Index (PPI) data for August.

The PPI report showed that the annual headline PPI grew at a slower pace of 1.7% from the estimates of 1.8% and 2.1% in July, downwardly revised from 2.2%. In the same period, the core producer inflation – which excludes volatile food and energy prices – rose steadily by 2.4%, slower than expectations of 2.5%. A slower pace in the price increase of goods and services at factory gates suggests a sluggish consumer spending trend, which generally prompts Federal Reserve (Fed) interest rate cut bets.

However, the monthly headline and core PPI rose at a faster-than-expected pace of 0.2% and 0.3%, respectively. Soft US annual PPI data has weighed on the US Dollar (USD). The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, edges lower to near 101.60.

The impact of the US PPI is expected to be lower on market speculation for Fed interest rate guidance. The central bank is almost certain to start reducing its borrowing rates gradually from next week as Wednesday’s Consumer Price Index (CPI) data for August showed signs of stickiness in inflationary pressures.

Meanwhile, the Australian Dollar (AUD) struggles to gain strength amid growing concerns over the Aussie economic growth due to the maintenance of higher interest rates by the Reserve Bank of Australia (RBA). Deepening economic worry has also forced market experts to discuss over RBA’s pivot to policy-easing.

Former RBA Governor Bernie Fraser criticized the current Monetary Policy Committee (MPC) for being overly focused on inflation at labour market’s cost. Fraser advised to lower the Official Cash Rate (OCR), warning of "recessionary risks" that could have severe consequences for employment.

• AUD/USD attracts some intraday sellers on reports that China will cut mortgage rates this month.
• Diminishing odds for a larger Fed rate cut underpins the USD and further contributes to the slide.
• Bets for the start of the Fed’s policy-easing cycle, the upbeat mood caps the buck and lends support.

The AUD/USD pair retreats around 40 pips from the vicinity of the 0.6700 mark, or a fresh weekly high set earlier this Thursday and drops to a daily low during the first half of the European session. Spot prices, for now, seem to have stalled the recovery from a four-week trough touched on Wednesday and currently trade around the 0.6670-0.6665 region, nearly unchanged for the day. 

Reports that China will cut interest rates on $5 trillion mortgages as soon as this month to try and bolster consumption activity revive concerns about a slowdown in the world's second-largest economy. This, in turn, weighs on antipodean currencies, including the Australian Dollar (AUD), which, along with a modest US Dollar (USD) strength, turn out to be key factors behind the sharp intraday downfall.

The crucial US Consumer Price Index (CPI) report released on Wednesday indicated that consumer prices in the US are easing overall. That said, the core CPI suggests that the underlying inflation remains sticky and dashed hopes for a larger rate cut by the Federal Reserve (Fed) next week. This leads to an uptick in the US Treasury bond yields and lifts the Greenback back closer to the monthly peak.

Investors, however, seem convinced that the US central bank will begin its policy-easing cycle and lower borrowing costs by 25 basis points at each of the three remaining policy meetings in 2024. This, along with the upbeat market mood, keeps a lid on any further gains for the safe-haven buck and offers some support to the risk-sensitive Aussie. Traders now look to the US Producer Price Index (PPI) for a fresh impetus.

• AUD/USD pulls back as US CPI report indicates core inflation steady at 3.2% YoY, dampening prospects for a 50-bps Fed rate cut.
• Money market futures now forecast an 85% likelihood of a 25-bps rate cut at the next Fed meeting.
• RBA Assistant Governor notes the Australian labor market is tight yet balanced, with the AUD poised for further US data releases this week.

The Australian Dollar dropped during the North American session after the latest US Consumer Price Index (CPI) report, which witnessed an uptick in prices. Market participants that priced in a larger Federal Reserve rate cut trimmed their bets, sponsoring a leg-up in the US Dollar. The AUD/USD trades at 0.6627 after hitting a daily high of 0.6673.  

AUD/USD falls to 0.6627 as rising US core inflation dims hopes for larger Fed rate cut

Data from the US Bureau of Labor Statistics (BLS) revealed that August’s headline inflation dipped from 2.9% to 2.6% YoY as expected. Still, the core, which excludes volatile items and is sought as a realistic inflation gauge, stalled at 3.2% YoY. In monthly figures, core CPI edged up from 0.2% to 0.3% while CPI stood at 0,2% MoM.

After the report, money market futures traders slashed the odds for 50 basis points (bps) cut to 15%, while chances for a 25-bps jumped to 85%, via data from the CME FedWatch Tool.

This underpinned the Greenback and weighed on the AUD/USD, which extended its losses to a daily low of 0.6622 before recovering some ground.

In the meantime, the US Dollar Index (DXY), which measures the buck’s performance against six currencies, held to minuscule gains of 0.02% at 10168.

Earlier in the Asian session, Reserve Bank of Australia (RBA) Assistant Governor Sarah Hunter delivered hawkish-tilted remarks, saying the labor market remains tight relative to full employment, but has moved into better balance since late 2022. Hunted stated the economy is moving through a turning point.

What to watch?

The Aussie economic docket will be empty for the remainder of the week. On Thursday, the US schedule will feature the Producer Price Index (PPI) and Initial Jobless Claims for the week ending September 7. On Friday, the University of Michigan Consumer Sentiment is awaited.

AUD/USD Price Forecast: Technical outlook

The AUD/USD has dropped below the 50- and 100-day moving averages (DMAs) at 0.6667 and 0.6647, opening the door to challenge the 200-DMA at 0.6616. If sellers push prices below the latter, look for further losses. First, they need to crack 0.6600, and the next stop would be the August 15 low of 0.6560.

Conversely, if buyers stepped in and pushed prices above the current week’s peak of 0.6689, look for a test of 0.6700.

The Australian Dollar (AUD) is expected to trade in a sideways range of 0.6630/0.6670. In the longer run, AUD is likely to edge lower to 0.6620, UOB Group FX analysts Quek Ser Leang and Peter Chia note.

AUD is likely to edge lower to 0.6620

24-HOUR VIEW: “Yesterday, we held the view that AUD “is likely to weaken further, even though the major support at 0.6620 is likely out of reach.” Our view did not turn out, as AUD traded sideways between 0.6642 and 0.6677, closing at 0.6653 (-0.12%). There has been no increase in either downward or upward momentum, and further sideways trading seems likely. Expected range for today: 0.6630/0.6670.”

1-3 WEEKS VIEW: “Our most recent narrative was from Monday (09 Sep, spot at 0.6675), wherein AUD ‘is likely to edge lower to 0.6620.’ We will continue to hold the same view as long as 0.6715 (no change in ‘strong resistance’ level) is not breached. Looking ahead, a clear break below 0.6620 will shift the focus to 0.6580.”

• AUD/USD attracts some buyers near the 100-day SMA support amid renewed USD weakness.
• A positive risk tone further benefits the Aussie and remains supportive of the intraday uptick.
• The lack of follow-through buying warrants caution for bulls ahead of the key US CPI report.

The AUD/USD pair manages to defend the 100-day Simple Moving Average (SMA) support and attracts some buyers near the 0.6645 region on Wednesday. Spot prices maintain the bid tone near the 0.6660-0.6665 area through the early European session and for now, seem to have snapped a three-day losing streak to over a three-week low touched on Tuesday.

The US Dollar (USD) struggles to capitalize on its gains registered over the past three days and retreats from the vicinity of the monthly peak amid dovish Federal Reserve (Fed) expectations. Apart from this, a positive tone around the European equity markets is seen undermining the safe-haven Greenback and benefiting the risk-sensitive Australian Dollar (AUD). This turns out to be a key factor offering some support to the AUD/USD pair, though the intraday uptick lacks bullish conviction.

Investors prefer to wait for the release of the latest US consumer inflation figures for cues about the Fed's rate-cut path, which will play a key role in influencing the USD price dynamics and provide a fresh directional impetus to the AUD/USD pair. Any further signs of cooling inflation would lift bets for a larger, 50 basis points rate cut by the Fed in September and weigh heavily on the buck. Meanwhile, the reaction to a stronger US CPI print is likely to be limited, suggesting more USD weakness.

The aforementioned fundamental backdrop supports prospects for a further near-term appreciating move for the AUD/USD pair amid the Reserve Bank of Australia's (RBA) hawkish stance. That said, it will still be prudent to wait for strong follow-through buying before confirming that the recent corrective pullback from a multi-month peak, around the 0.6825 region touched in August has run its course and placing aggressive bullish bets around the currency pair.

• AUD/USD falls to near 0.6650 as the US Dollar rises further ahead of the US inflation data for August.
• Investors see the US core PCI to have grown steadily by 3.2%.
• Australian Westpac consumer sentiment declined in September after expanding previously.

The AUD/USD pair falls to near 0.6650 in Tuesday’s North American session. The Aussie asset drops as the US Dollar (USD) extends its recovery, with investors focusing on the United States (US) Presidential debate between Vice President Kamala Harris and former President Donald Trump over the November elections. The Harris-Trump presidential debate will have a significant impact on the US Dollar.

The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, rises to near 101.70 and approaches a two-week high of 102.00.

The appeal of the US Dollar would strengthen further if the outcome of the presidential debate shows signs of Trump winning the elections. Donald Trump is known for advocating raising tariffs and higher fiscal spending, which would be favorable for the US Dollar.

Market participants will keenly focus on the US inflation data as it would influence expectations for the Federal Reserve (Fed) interest rate decision next week. The Fed is widely anticipated to start reducing interest rates but investors remain uncertain over the potential interest rate cut size.

According to the estimates, the annual headline CPI rose at a slower pace of 2.6% from 2.9% in July. In the same period, the core inflation-which excludes volatile food and energy prices- grew steadily by 3.2%. Signs of price pressures remaining sticky would weaken expectations for Fed large interest rate cuts, while soft figures would strengthen them.

In the Asia-Pacific region, worsening consumer sentiment has weighed on the Australian Dollar (AUD). Australian Westpac-Melbourne Institute consumer sentiment index, released in Tuesday’s Asian trading hours, fell to 0.5% in September after increasing 2.8% in August. Australian consumer sentiment is expected to have declined due to persistent price pressures and higher interest rates by the Reserve Bank of Australia (RBA).

The consumer sentiment could weaken further as the RBA is unlikely to start reducing its key Official Cash Rate (OCR) this year.

The Australian Dollar (AUD) is likely to weaken further; the support at 0.6620 is likely out of reach today, UOB Group FX strategists Quek Ser Leang and Peter Chia note.

AUD to fall below 0.6620

24-HOUR VIEW: “AUD plummeted and closed sharply lower last Friday. Yesterday, we indicated that ‘while the sharp drop appears to be overdone, there is scope for AUD to dip to 0.6650 before a rebound is likely.’ We also indicated that ‘the next support at 0.6620 is unlikely to come under threat.’ In line with our view, AUD dipped to a low of 0.6648. However, there is no sign of a rebound yet. In other words, AUD is likely to weaken further today, even though the major support at 0.6620 is likely out of reach. Resistance is at 0.6675, followed by 0.6690.”

1-3 WEEKS VIEW: “When AUD was trading at 0.6675 yesterday, we highlighted that AUD ‘is likely to edge lower to 0.6620.’ We added, ‘to keep the momentum going, AUD must remain below the ‘strong resistance’ level, currently at 0.6770.’ AUD then fell to a low of 0.6648, closing at 0.6661 (- 0.15%). We continue to hold the same view as long as 0.6715 (‘strong resistance’ level was at 0.6770) is not breached. Looking ahead, a clear break below 0.6620 will shift the focus to 0.6580.”

• AUD/USD has extended its downtrend to the 200-period SMA. 
• It is biased to fall further although RSI is mildly oversold.  

AUD/USD extends the short-term downtrend it began after rolling over at the August 29 highs. 

According to technical analysis theory, “the trend is your friend” which suggests the odds favor AUD/USD further extending its downtrend to lower lows.  

AUD/USD 4-hour Chart

AUD/USD has met the next downside target at 0.6645 and is finding support at the 200-period Simple Moving Average (SMA). If it can close below 200 SMA and 0.6645 it will indicate the downtrend is probably falling further, with the next target at 0.6587, the 0.50 Fibonacci ratio retracement level of the August rally. 

The Relative Strength Index (RSI) momentum indicator is mildly oversold, advising traders not to add to their short positions. There is a risk of a correction, but for this to gain credence the RSI would need to recover firmly back into neutral territory. 

Further weakness could see AUD/USD fall to 0.6565 (August 15 low), followed by 0.6532, the 0.618 ration Fibonacci retracement of the August rally. At that level it will probably encounter firmer support.

• AUD/USD falls sharply to near 0.6650 amid strength in the US Dollar.
• Traders pare Fed large interest rate cut bets as US recession fears diminish.
• A sharp deflation in China’s PPI weighs on the Australian Dollar.

The AUD/USD pair slides to near 0.6650 in Monday’s North American session. The Aussie asset weakens as the US Dollar (USD) extends its recovery, with traders paring Federal Reserve (Fed) large interest rate cut bets on diminished United States (US) recession fears. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, jumps to near 101.60.

Fears of the US entering a recession receded after the release of the Friday’s Nonfarm Payrolls (NFP) data for August, which indicated that the pace of slowdown in the job growth in not as fast as it appeared in July figures. The data showed that US employers hired 142K job-seekers in August, fewer than estimates of 160K but significantly higher than the prior release of 89K.

Moderate growth in the US job market forced traders to pare bets supporting large interest rate cuts from the Federal Reserve (Fed) this month. According to the CME FedWatch tool, the possibility for the Fed reducing interest rates by 50 basis points (bps) to 4.75%-5.00% in September is 25%, while the rest favors a 25-bps interest rate cut.

Going forward, investors will focus on the US Consumer Price Index (CPI) data for August, which will be published on Wednesday. The US inflation data will significantly influence market speculation for how much the Fed will cut interest rates this month. Monthly headline and core inflation are estimated to have grown steadily by 0.2%. Annual headline CPI is expected to have risen at a slower pace of 2.6% from the former release of 2.9%.

In the Asia-Pacific region, the Australian Dollar (AUD) remains under pressure due to rising concerns over China’s economic growth. China’s CPI grew at a slower pace, and its Producer Price Index (CPI) deflated at a faster pace in August, which also weighed on antipodeans, being their leading trading partners. 

Scope for the Australian Dollar (AUD) to dip to 0.6650 before a rebound is likely, and below that, AUD is likely to edge lower to 0.6620, UOB Group FX strategists Quek Ser Leang and Alvin Liew note.

AUD is likely to edge lower to 0.6620

24-HOUR VIEW: “After rising briefly to 0.6768 last Friday, AUD plummeted and closed lower by 1.05% (0.6670). While the sharp drop appears to be overdone, there is scope for AUD to dip to 0.6650 before a rebound is likely. The next support at 0.6620 is unlikely to come under threat. Resistance is at 0.6690, followed by 0.6715.”

1-3 WEEKS VIEW: “Last Friday, AUD fell sharply, closing at 0.6671 (-1.05%). Downward momentum has increased, albeit not much. From here, AUD is likely to edge lower to 0.6620. To keep the momentum going, AUD must remain below the ‘strong resistance’ level, currently at 0.6770.”

• AUD/USD price tests the lower boundary of the descending channel around the level of 0.6440.
• The 14-day RSI breaks below the 50 level, confirming the ongoing bearish trend for the pair.
• The immediate barrier appears at the 50-day EMA at 0.6675 level.

AUD/USD extends its losses for the second consecutive day, trading around 0.6650 during the European hours on Monday. The daily chart analysis shows that the pair is trekking down along the lower boundary of the descending channel, suggesting the reinforcing of a bearish bias.

Additionally, the 14-day Relative Strength Index (RSI) falls below the 50 level, confirming the ongoing bearish trend for the AUD/USD pair.

However, the daily chart analysis also indicates that the 9-day Exponential Moving Average (EMA) is positioned above the 50-day EMA, which is typically interpreted as a short-term bullish signal. This suggests that the recent price action is outperforming the longer-term trend.

On the downside, the AUD/USD pair targets the lower boundary of the descending channel around the level of 0.6440. A break below this level could strengthen the bearish bias and lead the pair to navigate the region around the throwback support at 0.6575.

In terms of resistance, the immediate barrier appears at the 50-day EMA at 0.6675 level, followed by the nine-day EMA at 0.6715 level. A breakthrough above the latter could weaken the bearish bias and support the AUD/USD pair to test the upper boundary of the descending channel around the 0.6750 level.

A breach above the descending channel could extend the upside and lead the pair to explore the region around its seven-month high of 0.6798, reached on July 11.

AUD/USD: Daily Chart

• AUD/USD tumbles to near 0.6700 after the release of the US NFP data for August.
• Disappointment from US job growth data boosts Fed interest rate cut hopes.
• RBA Bullock’s hawkish interest rate guidance failed to uplift the Australian Dollar.

The AUD/USD pair surrenders its intraday gains and turns negative in Friday’s North American session. The Aussie asset slumps to near 0.6700 in the aftermath of the United States (US) Nonfarm Payrolls (NFP) data for August, which increased buying interest in the US Dollar (USD) significantly.

The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, reverses its downside move and climbs to near 101.40.

The US NFP report indicated that the job demand remained weaker than expected. Fresh payrolls came in lower at 142K than expectations of 160K but higher than July’s release of 89K, downwardly revised from 114K. The Unemployment Rate fell to 4.2%, as expected, from the prior release of 4.3%.

Disappointing US job data has given a green signal to the Federal Reserve (Fed) to start reducing the policy-easing process this month. Weak US job data has also prompted market expectations that the Fed could begin cutting interest rates aggressively.

According to the CME FedWatch tool, the likelihood for the Fed to begin reducing interest rates by 50 basis points (bps) to 4.75%-5.00% has increased to 45% from 30% recorded a week ago.

In the Asia-Pacific region, the Australian Dollar (AUD) performs weakly despite firm speculation that the Reserve Bank of Australia (RBA) is unlikely to cut interest rates this year. Prospects of RBA keeping interest rates at their current levels by the year-end strengthened after RBA Governor Michele Bullock’s hawkish interest rate guidance. Bullock said in her speech at the Anika Foundation on Thursday, "If the economy evolves broadly as anticipated, the board does not expect that it will be in a position to cut rates in the near term.”

• AUD/USD is pulling back within a short-term downtrend. 
• The correction is quite shallow and will probably run out of steam and lead to a resumption of the bear trend. 

AUD/USD reversed trend at the August 29 highs and started declining. The pair has since established a sequence of falling peaks and troughs which indicates the short-term trend has probably reversed and is now bearish. 

Given it is a cornerstone of technical analysis theory that “the trend is your friend” the odds now favor an extension of the downtrend to lower lows.  

AUD/USD 4-hour Chart

AUD/USD bottomed at 0.6685 on September 4 and has been pulling back higher in a counter-trend reaction since. This correction has been quite shallow, however, and it will probably soon run out of steam, after which bears will push price lower again in line with the trend. 

A break below the 0.6685 low would confirm a continuation of the downtrend. The next target below that is 0.6645, followed by 0.6587, the Fibonacci 0.50 ratio retracement level of the August rally.

• AUD/USD edges lower to near 0.6735 in Friday’s European session, down 0.10% on the day. 
• RBA’s hawkish remarks fail to boost the Aussie amid the cautious sentiment. 
• The US NFP report for August will be the highlight on Friday.

The AUD/USD pair trades on a softer note around 0.6735, snapping the two-day losing streak during the European session on Friday. The markets turn cautious ahead of the US employment reports on Friday. 

The Australian Dollar (AUD) weakens on the day despite the softer Greenback and the hawkish comments from Reserve Bank of Australia (RBA) Governor Michele Bullock. RBA’s Bullock said on Thursday, "If the economy evolves broadly as anticipated, the board does not expect that it will be in a position to cut rates in the near term.” 

On the other hand, investors see the US Federal Reserve (Fed) start easing its monetary policy at its upcoming meeting in September. The CME FedWatch tool showed that the markets are now pricing in a nearly 59% chance of a 25 basis points (bps) Fed rate cut in September, while the possibility of a 50 bps rate cut stands at 41%. 

The disappointing ADP Employment Change data on Thursday weighs on the USD against the AUD. Automatic Data Processing (ADP) revealed on Thursday that private sector employment increased by 99,000 in August, followed by the 111,000 (revised from 122,000) increase reported in July and below the consensus of 145,000 by a wide margin. 

Investors will closely watch the US employment data on Friday as it might offer some cues about the size and pace of the Fed easing rate cycle. Investors estimate NFP to rise 160,000 in August following the 114,000 increase seen in July. The Unemployment Rate is projected to edge lower to 4.2% in August. The weaker readings might prompt a 50 bps rate cut by the Fed, which exerts some selling pressure on the US Dollar.