AUD forced lower after US employment conditions improve
Daily Currency Update
The AUD opens lower this morning as markets respond to stronger than anticipated US payroll data. Having maintained a narrow range throughout the domestic session, bouncing between US$0.6570 and US$0.6590, the AUD pitched toward intraday lows at US$0.6540 after US non-farm payroll rose more than expected. In June, 147,000 jobs were added to the US economy, well above the 106K anticipated, while May and April numbers were revised higher and the unemployment rate ticked back down to 4.1%. The stronger print amplified the image of a robust labour market, driving gains across yield curves and pushing the US dollar higher. After pitching lower, the AUD found support, recouping losses as markets looked deeper into the employment report. While headlines suggest strength, underlying markers point to a softer employment environment. The AUD opens this morning just south of US$0.6570.Our attention today turns to domestic household spending markers. These will be closely monitored after Wednesday’s weaker retail sales report. With consumer led growth faltering, a soft print will only hasten calls for the RBA to lower rates again.
Key Movers
US non-farm payroll numbers dominated direction through trade on Thursday. A stronger than anticipated jump in jobs and a drop in the underlying unemployment rate helped drive a sharp rise in US yields that propelled the dollar higher. The DXY index climbed 0.6% in the moments following the print, before a closer look showed public sector employment driving gains, with private sector growth pitching to an 8-month low. The USD gave back gains yet still sits 0.4% higher on the day.In other news, the British pound outperformed, outpacing other majors as markets restore gilt prices and the turmoil that engulfed the market earlier in the week calmed. Prime Minister Starmer assured markets the Chancellor of Exchequer’s role was secure and affirmed the government’s commitment to fiscal discipline.
With US markets closed in observance of Independence Day and little of note on the macro docket, we look to trade and geopolitical headlines for direction into the weekly close.
Expected Ranges
- AUD/USD: 0.6500 - 0.6600 ▼
- AUD/EUR: 0.5520 - 0.5620 ▲
- GBP/AUD: 2.0700 - 2.1000 ▲
- AUD/NZD: 1.0780 - 1.0880 ▲
- AUD/CAD: 0.8880 - 0.9020 ▼