AUD/USD slides below 0.6400 to refresh YTD low as downbeat Australia employment report joins hawkish Fed bias

• AUD/USD drops for the eighth consecutive day after downbeat Australia job numbers for July.
• Australia Employment Change slumps to -14.6K, Unemployment Rate rises to 3.7% in July.
• Hawkish Fed Minutes, China woes also exert downside pressure on Aussie pair.
• Light calendar, oversold RSI may allow bears to take a breather but risk catalysts are the key to watch for clear directions.

AUD/USD justifies downbeat Australian employment data, as well as the broad risk-off mood, by refreshing the Year-To-Date (YTD) low near 0.6370 during early Thursday. In doing so, the Aussie pair drops for the eighth consecutive day amid a broadly firmer US Dollar.

Australia’s headline Employment Change slumped to -14.6K for July on a seasonally adjusted basis versus 15.0K expected and 32.6K prior whereas the Unemployment Rate edges higher to 3.7% compared to the market’s expectations of once again witnessing 3.5% figure.

Apart from the mostly downbeat Aussie jobs report, economic concerns surrounding Australia’s biggest customer China and the recent hawkish Minutes of the Federal Open Market Committee’s (FOMC) July 25-26 meeting weigh on the AUD/USD prices.

That said, the latest Fed meeting minutes highlighted the policymakers’ discussion on the inflation pressure, despite marking a division on the rate hike decision. That said, the Minutes also conveyed that most policymakers preferred supporting the battle again the ‘sticky’ inflation.

Not only the hawkish Fed Minutes but the mostly upbeat US data and firmer US Treasury bond yields also inspire the AUD/USD bears. On Wednesday, the US Industrial Production marked a surprise 1.0% growth for July versus 0.3% expected and -0.8% prior while the Capacity Utilization for the said month also improved to 79.3% from 78.6%, compared to market forecasts of 79.1%. Further, the Building Permits edged higher to 1.442M for July from 1.441M whereas the Housing Starts rose to 1.452M for the said month versus 1.398M prior and 1.448M expected. It’s worth noting that both the Building Permits Change and Housing Starts Change improved more than market forecasts and previous readings. Previously, the US Retail Sales grew 0.7% MoM in July versus the 0.4% expected and 0.3% reported in June (revised from 0.2%) and suggested strong consumer spending, mainly due to improved wages, which in turn favored the Greenback to stay firmer during early weekdays.

At home, Australia’s Westpac Leading Index slid to -0.02% MoM for July from a downwardly revised prior of 0.07%. Further, China’s Housing Price Index dropped to -0.1% for July from 0.0% prior.

On a different page, a slump in China’s housing prices, triggered in June joins the fears about another bond market crisis in the Dragon Nation as the biggest private realtor Country Garden struggles to pay bond payments. It should be observed that the Chinese policymakers have been trying by all means to defy the concerns about easing economic recovery but no meaningful market reaction has been witnessed of late, which in turn flags concerns about the recession of the world’s second-largest economy and weighs on the AUD/USD price.

Additionally weakening the sentiment and the AUD/USD price is the news that the global rating agency Fitch Ratings lowered medium-term Gross Domestic Product (GDP) projections for 10 developed economies in its quarterly Global Economic Outlook.

Against this backdrop, Wall Street closed in the red while the US 10-year Treasury bond yields refreshed the yearly top to 4.278%. It should be noted that S&P500 Futures dropped to the lowest level in seven weeks by the press time and keep the Aussie bears hopeful of witnessing further downside.

Moving on, a light calendar may allow the Aussie bears to take a breather in case where any risk-positive headlines erupt. However, the downside bias isn’t likely to be reversed anytime soon. That said, the US weekly jobless claims and Philadelphia Fed Manufacturing Survey for August should also be watched for clear directions.

Technical analysis

The AUD/USD pair’s sustained downside break of an ascending support line from November 2022, now resistance around 0.6490, directs bears toward the late 2022 swing low of around 0.6275.