Aussie dollar retreats on US strength despite robust Australian trade data

Daily Currency Update

The AUD/USD currency pair has slipped lower to around 0.6520 during Thursday’s European trading session, as the Australian dollar (AUD) comes under renewed selling pressure. This decline follows a period of volatility for the pair, largely driven by shifting sentiment around the US dollar (USD) and evolving economic data from both countries. Earlier this week, the US dollar weakened sharply after the release of JOLTS Job Openings data for July, which came in softer than expected. The report showed that American employers had listed 7.18 million job openings, falling short of the 7.4 million forecast and down from 7.36 million in June. This marked a continued trend of moderation in the US labor market, suggesting that employers may be slowing hiring amid broader economic uncertainty. As a result, the USD briefly pulled back as investors speculated that the Federal Reserve might not need to raise interest rates further if the labor market is losing momentum. However, the Greenback has since regained strength. Traders appear to be reassessing the overall economic picture and still see the US economy as relatively strong compared to others. The stabilising USD has, in turn, put downward pressure on the AUD, which is more sensitive to global risk sentiment and commodity demand. On the Australian side, there was some positive economic news that initially offered support to the Aussie. The Australian Bureau of Statistics reported a better-than-expected Trade Balance for July, with the surplus rising to AUD 7.31 billion. This result was well above market expectations of AUD 4.92 billion and higher than June’s surplus of AUD 5.37 billion. The improvement was likely driven by strong export performance, particularly in key sectors like iron ore, coal and natural gas, which remain important revenue sources for Australia. Despite this strong trade data, the Australian dollar has struggled to hold gains. This highlights the fact that local economic indicators are currently taking a back seat to broader global forces, especially those related to the US economy and Federal Reserve policy. Looking ahead, market participants will be watching for additional US data releases, such as employment figures, inflation reports and comments from Fed officials, for further clues on interest rate direction. Any signals that point to either continued economic resilience or further cooling could have a significant impact on the USD and, by extension, the AUD/USD exchange rate.