Audusd falls by 0.28% as U.S. manufacturing improves and Australian labor market shows mixed signals

AUDUSD Analysis

Performance after Thursday
Period	Pct	Chg	Momentum
Thursday	-0.28%	-17.5 Pips
Week to-date	0.95%	58.5 Pips
January	-0.1%	-6.5 Pips

Upcoming key events (London Time)

No major events for the day.

What happened lately

For the U.S. economy, there was a notable decrease in monthly retail trade growth in December, weakening to 0.4% compared to 0.7% in November, even though retail trade excluding automobiles improved to 0.4%. This slowdown can signal a decrease in consumer spending flexibility. Simultaneously, initial unemployment claims rose to 217,000, indicating a slight deterioration in the labor market. However, the manufacturing outlook showed a significant improvement with the index increasing from -10.9 to 44.3 points, reflecting a more optimistic business environment. The U.S. retail control group advanced to 0.7% from 0.4%, adding some positivity to the retail sector. Changes in inflation showed a mixed picture; overall CPI inflation increased to 0.4%, while the core inflation decreased slightly, suggesting a mild easing in price pressures.

In Australia, the labor market data presents a mixed scenario. Part-time employment saw a substantial rise with 80,000 new jobs in December compared to a decline in November, possibly compensating for the decrease in full-time jobs, which dropped by 23.7K. The participation rate slightly increased to 67.1%, but the unemployment rate rose to 4% from 3.9%, indicating a larger workforce searching for jobs but not all securing employment. Consumer inflation expectations decreased marginally to 4% in January, hinting at moderating inflationary pressures, which could influence the Reserve Bank of Australia’s policy expectations. Moreover, monthly employment changes improved to 56.3K, a positive signal for job creation dynamics in the economy.

The data releases indicate contrasting economic conditions in the U.S. and Australia. The U.S. showed mixed retail and employment data with a positive turn in the manufacturing outlook, while Australia’s labor statistics suggest a complex labor market with weaker full-time employment. The decrease in consumer inflation expectations in Australia contrasts with slightly higher inflation in the U.S. These developments may influence the currency pair AUDUSD by adding pressure on the Australian dollar relative to the U.S. dollar. As such, despite the mixed economic outlooks, the stronger-than-expected manufacturing data from the U.S., coupled with a slightly deteriorating Australian labor market, likely contributed to the AUDUSD’s decline by 0.28% to 0.62135, reflecting the market’s cautious stance on Australia’s future economic trajectory compared to the U.S.

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What can we expect from AUDUSD today?

AUDUSD on Thursday dropped -0.28% to 0.62135. Price is below 9-Day EMA while Stochastic is rising.

Updated daily direction for AUDUSD looks bearish as the pair posted lower in Thursday trading session.

Looking ahead for the day, immediate support level is at S1 0.61901 with break below could see further selling pressure towards S2 at 0.61668. To the upside, with the current momentum bearish, we prefer to look at breakout of the recent daily high of 0.62464 as a potential indicator of buying interest. Failure to break the resistance level would continue to echo bearish sentiment. A close below 0.61949 would indicate selling pressure.

For the week to-date, take note that AUDUSD is mixed as compared to the prior week.

Key levels to watch out:

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