Key points:
The Australian dollar managed to recover from early losses on Thursday, trading at $0.6781, having bounced back from a low of $0.6737.
Overnight, the Aussie had reached as high as $0.683 after the Federal Reserve’s decision to reduce rates by 50 basis points.
See: Aussie trading at 0.67814 as seen on the VT Markets app.
The AUD/USD pair has seen a surge following Australia’s robust employment figures for August, where 47,500 jobs were added, significantly beating the forecasted 25,000. This marks the third consecutive month of employment gains, which has helped maintain the unemployment rate at 4.3%.
On the 1-hour chart, we notice the AUD/USD breaking through the 0.6780 resistance level after touching a high of 0.6826, just before pulling back slightly. The moving averages (5, 10, 30) are trending upwards, indicating sustained bullish momentum. Meanwhile, the MACD is showing signs of potential divergence, with the histogram flattening, signalling possible consolidation in the short term.
We expect the 0.6780 level to act as key short-term support, while resistance is anticipated around 0.6825. If the pair continues its upward momentum, we may see a test of the 0.6850 level. However, should profit-taking or risk aversion hit the markets, a slide back towards 0.6750 could be on the cards. Traders are likely eyeing upcoming central bank meetings for further direction.
The strength in hiring reflects a tight labour market, which could support the Reserve Bank of Australia’s (RBA) stance against cutting rates in the near future.
While forward indicators of demand have softened, the labour market remains robust, which signals continued economic resilience.
The New Zealand dollar faced a more challenging session, trading fractionally lower at $0.6203 after hitting $0.6267 overnight. It found support around $0.6180 and $0.6107.
While New Zealand’s economy contracted by 0.2% in the second quarter, this was a smaller decline than the forecasted 0.4% fall, largely due to a sharp reduction in imports.
Despite the slightly better-than-expected contraction, the data confirmed the broader weakness in the New Zealand economy. As a result, markets have fully priced in a quarter-point rate cut from the Reserve Bank of New Zealand (RBNZ) in October.
Previously: Australian and New Zealand dollars hold ground as risk sentiment stabilises
While traders in both countries are positioning for rate cuts, the RBA’s relatively stronger labour market and the RBNZ’s more immediate concerns suggest a divergent path for these currencies.
The Australian dollar may continue to find support from strong domestic data, while the kiwi dollar could remain under pressure as New Zealand’s central bank prepares for a more aggressive easing cycle.
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