Aussie shaky after soft job data

It has been a busy session for the Australian dollar, which started the day with losses but has recovered. In European trade, AUD/USD is trading at 0.6919, up 0.23%.

Mixed Australian data

Australia delivered some mixed data earlier today. The headline Employment Change for January surprised on the downside at -11,500 after -14,600 prior, well below the forecast of 20,000. There was better news on the inflation front, as Consumer Inflation Expectations for February fell to 5.1%, down from 5.6% expected and prior. The Australian dollar initially declined after these releases but has recovered and eked out small gains.

The Aussie had a miserable outing on Wednesday, falling 1.1%. This was courtesy of hawkish remarks from RBA Governor Lowe, which unnerved investors. Lowe appeared before a parliamentary committee and confirmed that further rate hikes are on the way. The central bank has tightened sharply but this has not brought down inflation. In December, CPI hit 7.8%, the highest level since 1990, which Lowe admitted was “way too high”. The double whammy of rising rates and red-hot inflation is squeezing households and businesses, but Lowe is insistent that the number one priority is to curb inflation and avoid inflation expectations from becoming entrenched.

US retail sales surprised with a huge 3% gain in December, the largest gain since January 2022. This rosy reading comes on the heels of an inflation release that was higher than expected. These strong numbers helped send AUD/USD sharply lower on Wednesday, as the Fed will likely raise rates even higher in order to put the brakes on the surprisingly resilient economy. The retail sales data follows a blowout nonfarm payroll release and an inflation release that was stronger than expected, pointing to a resilient US economy despite rising interest rates.

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AUD/USD Technical

• AUD/USD is testing resistance at 0.6929. Above, there is resistance at 0.7001
• 0.6846 and 0.6774 and providing support