Australian Dollar sees mild losses after labor market data from the US and Australia

• AUD/USD slightly declined on Thursday, just below 0.6730.
• Newly released employment data sets the direction for possible RBA and Federal Reserve decisions.
• However, monetary divergences between both banks remain steady.

The Australian Dollar (AUD) suffered minor losses against the USD during Thursday's session, falling marginally to 0.6730. The AUD slightly faltered due to investor responses to both Australian and US labor market data that has provided further clues for the next Reserve Bank of Australia (RBA) and Federal Reserve decisions.

Despite the underperforming Australian economy, stubbornly high inflation pressures the RBA to defer rate cuts potentially limiting the AUD's downside. The RBA is anticipated to be among the final central banks within the G10 countries to introduce rate cuts, a factor that promises to sustain the AUD's momentum.

Daily digest market movers: Australian labor market data guides the AUD course.

• The Australian Bureau of Statistics (ABS) revealed an impressive 50.2K increase in employment changes, surmounting the earlier market forecasts of 20K and May's 39.5K record.
• On the negative side, the Unemployment Rate escalated slightly from 4.0% to 4.1%, and although minor, it might ease the RBA’s hawkish stance.
• On the US front, labor data indicates applicants for unemployment insurance benefits rose by 243K in the week ending on July 13.
• These figures exceeded initial forecasts and previous weekly records according to Thursday's report from the US Department of Labor.
• Currently, projections predict nearly a 50% chance of the RBA taking a rate hike, possibly in September or November.
• The potential rate cut by the Federal Reserve in September, however, seems a close deal and divergent approaches by the Fed and RBA towards their respective monetary policies could curb the losses of the pair.

Technical Analysis: AUD/USD continues flat, overall outlook stays positive.

Despite the losses in the week, the future of AUD/USD remains generally positive as the pair maintains levels not experienced since the beginning of the year. After the early July gains, indicators such as the Relative Strength Index (RSI) and the Moving Average Convergence Divergence (MACD) have shown weakening trends, implying the pair has entered a correction period. For the next sessions, the pair might side-ways trade in the 0.6700-0.6800 channel as buyers book profits.