- AUD/USD outlook remains deteriorated as China’s data disappoints, along with the declining Australian trade surplus.
- Friday’s US NFP data is expected to reveal positive figures, keeping the dollar buoyed.
- Technically, the price remains prone to more losses under the 20-period MA
The AUD/USD price remains under pressure near the 0.6690 level, struggling to regain its footing as the week comes to a close. The US dollar’s strength, coupled with mixed signals from China, has caused the pair to weaken for the third consecutive day. Meanwhile, uncertainty about the policy paths of the Federal Reserve and the Reserve Bank of Australia keeps traders cautious.
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The Friday’s US Nonfarm Payrolls report remains a key event. The unemployment rate is expected to drop to 4.5%, and the number of new jobs created in December is expected to be around 60k, slightly lower than in November.
Recent US labor data has shown a mixed scenario. ADP employment data showed a slight rise in private hiring, but JOLTS job openings cooled, indicating that demand for workers was gradually easing rather than crashing. The ISM Services PMI, on the other hand, came in higher than expected, supporting the notion that certain parts of the US economy remain strong.
The Dollar Index (DXY) is hovering around 98.90, showing signs of recovery. Despite the expectation of rate cuts later this year, futures markets are betting that the Fed will maintain rates at its January meeting. That background keeps the greenback strong and caps AUD/USD before the jobs data release.
The tone has been softer on the Australian side. A narrowing trade surplus, resulting from declining exports and slightly higher imports, has raised concerns about demand from outside the country. Inflation has cooled from recent highs but remains above the RBA’s target. This makes it more challenging to forecast how stringent the policy needs to be. RBA officials emphasize patience, indicating that rate cuts are unlikely to occur soon. However, the markets are still not convinced that further tightening is needed.
The most recent inflation numbers from China didn’t help the Aussie much. Consumer inflation was lower than expected, with producer prices still falling, despite a mild improvement. These numbers have weighed on the Aussie, as China is Australia’s most important trading partner.
In the short term, the AUD/USD outlook hinges on the release of data. The Aussie could benefit if the US payrolls report is less impressive than anticipated. If NFP remains upbeat, the pair could decline further.
AUD/USD Technical Outlook: Bearish Below 20-MA
Falling below the 20- and 50-period MAs around 0.6700 shows a strong selling pressure. This could lead to a demand zone around 0.6660, ahead of the 200-period MA at 0.6625, and then a horizontal support at 0.6600.
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On the other hand, moving above the 20-period MA at 0.6720 could gather buying strength and lead to a test of the weekly highs near 0.6765, ahead of 0.6800.
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