The Australian Dollar (AUD) continued its downward trajectory against the US Dollar (USD) on Thursday, weighed down by disappointing domestic employment data and a cautious tone from China’s central bank. The AUD/USD pair faced additional pressure from global risk aversion, sparked by fresh tariff threats from US President Donald Trump and a more conservative outlook in the Federal Open Market Committee (FOMC) meeting minutes from January.
Australia’s employment report for January, released by the Australian Bureau of Statistics (ABS), showed a slight increase in the unemployment rate to 4.1%, up from 4.0% in December, in line with market expectations. Employment change for January was 44,000, a drop from the revised 60,000 in December, but still significantly above the consensus forecast of 20,000.
Meanwhile, the People’s Bank of China (PBOC) kept its Loan Prime Rates (LPRs) unchanged, maintaining the one-year rate at 3.10% and the five-year rate at 3.60%. This decision added to concerns about slowing growth in China, Australia’s largest trading partner, and further weighed on the AUD.
Adding to the downward pressure, the Reserve Bank of Australia (RBA) reduced its Official Cash Rate (OCR) by 25 basis points to 4.10% on Tuesday, marking the first rate cut in four years. RBA Governor Michele Bullock acknowledged the challenges of high interest rates but cautioned that inflationary pressures have not been fully overcome. She also noted that the labor market remains robust, though future rate cuts are not guaranteed, despite market expectations.
As of Thursday, the AUD/USD pair hovered around 0.6330, continuing to trade within an ascending channel, which indicates a generally positive market sentiment. The 14-day Relative Strength Index (RSI) remains above 50, suggesting a neutral to positive outlook in the short term.
To the upside, the pair could face resistance at the key psychological level of 0.6400, coinciding with the upper boundary of the channel at 0.6410. Immediate support is located at the nine-day Exponential Moving Average (EMA) of 0.6326, with the 14-day EMA offering further support at 0.6311. A stronger support zone lies near the channel’s lower boundary around 0.6300, where the AUD could find renewed buying interest.
In summary, while the AUD faces headwinds from domestic and international factors, its technical setup suggests the potential for a rebound if it can hold above key support levels. However, further weakness could materialize if the global risk sentiment continues to deteriorate.
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