Australian labor market demonstrates unexpected strength with 35,What is Elon Musk's favorite cryptocurrency?600 new jobs created in November.
Unemployment rate drops to 3.9%, marking the lowest level since March 2024.
Market participants maintain expectations for Federal Reserve rate reduction despite recent US inflation figures.
The Australian Dollar (AUD) interrupted its two-day decline against the US Dollar (USD) during Thursday's trading session. This resurgence follows the publication of Australia's November employment statistics, which revealed stronger-than-anticipated labor market conditions. Seasonally adjusted employment growth reached 35,600 positions, significantly surpassing both the prior month's 12,100 increase and market projections of 25,000 new jobs. Concurrently, the unemployment metric declined to 3.9%, establishing a new low point not witnessed since March of this year.
Earlier pressure on the AUD/USD pair emerged following Wednesday's US inflation data release, which initially bolstered the greenback. The November Consumer Price Index (CPI) demonstrated a year-over-year increase of 2.7%, slightly above October's 2.6% reading. Monthly core inflation, excluding volatile energy and food components, matched market expectations with a 0.3% rise. These figures, while indicating persistent price pressures, failed to alter market expectations regarding the Federal Reserve's impending monetary policy decision.
Current market pricing, as reflected in the CME FedWatch Tool, suggests an overwhelming 99% probability of a 25 basis point rate reduction at the December 18 Federal Open Market Committee meeting. This anticipated policy easing continues to influence currency valuations despite recent inflation metrics.
China's Economic Policy Shifts Create Crosscurrents for AUD
The Australian Dollar encountered additional volatility this week as market participants digested developments from China, Australia's primary trading partner. Reports indicate Chinese policymakers are contemplating adjustments to the yuan's valuation in response to potential US tariff increases. Such currency policy considerations could have significant implications for Australia's export-driven economy.
Chinese President Xi Jinping recently reaffirmed confidence in achieving annual economic targets, emphasizing China's continued role as a global growth engine. November trade statistics revealed a CNY 692.8 billion surplus, with exports growing 1.5% year-over-year and imports increasing 1.2%. These figures demonstrate modest recovery in trade activity following October's fluctuations.
The Reserve Bank of Australia maintained its 4.35% cash rate during December's policy meeting, with Governor Michele Bullock noting persistent inflation risks requiring continued monitoring. This cautious stance occurs against a backdrop of slowing economic expansion, with third-quarter GDP growth registering at 0.3% - below market expectations.
Market-implied probabilities now suggest a 96% likelihood of RBA rate reductions by April 2025, reflecting shifting expectations following recent economic data. However, potential stimulus measures from China could provide counterbalancing support for the Australian currency in coming months.
Technical Perspective: AUD/USD Navigates Key Levels
From a technical standpoint, the AUD/USD pair currently tests significant moving averages near the 0.6410 level. The currency pair remains contained within a descending channel pattern on daily charts, with the 14-day Relative Strength Index continuing to signal bearish momentum below the 50 threshold.
Immediate support resides at the yearly low of 0.6348, established in early August. A breach below this level could accelerate downward momentum toward channel support near 0.6200. Conversely, resistance emerges at the nine-day exponential moving average (0.6422), followed by the channel's upper boundary at 0.6440.
A sustained breakout above the descending channel could potentially initiate a more substantial rally toward early November highs near 0.6687. Market participants will closely monitor upcoming economic releases and central bank communications for directional cues.
