The Australian Dollar faced a sharp plunge on Friday as the AUD/USD pair tumbled close to its August lows of 0.6350 in the aftermath of the release of the US November Nonfarm Payrolls (NFP) report.
The US jobs data presented a much more robust increase in employment than anticipated. Coupled with this, mounting expectations of an early interest rate cut by the Reserve Bank of Australia (RBA) exerted significant bearish pressure on the Aussie Dollar. Compounding the issue, the domestic GDP growth figures that came in weaker than expected further clouded the outlook for the AUD/USD pair.
In the daily digest of market movers, the US NFP for November was reported at 227,000, a figure that dwarfed the previous increase of 12,000 and the expected 200,000. The Unemployment Rate edged up to 4.2% from 4.1%. Monthly Average Hourly Earnings also saw a rise of 0.4%, surpassing the expected 0.3% and remaining steady from the previous month’s figure. The University of Michigan Consumer Sentiment for December outperformed estimates, reaching 74.0, an improvement from the prior 71.8. Additionally, five-year inflation expectations declined to 3.1% from 3.2% in November.
From a technical perspective, the AUD/USD’s outlook is decidedly bearish as it grapples near its August lows. The Relative Strength Index (RSI), a key momentum oscillator gauging the speed and alteration of price movements, is nearing oversold territory. This indicates intense selling pressure. Likewise, the Moving Average Convergence Divergence (MACD), which monitors the relationship between two exponential moving averages, is also reflecting bearish ascendancy. Nevertheless, given the extremity of these downward movements, there is a possibility that an upward correction could materialize.
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