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AUD/USD ticks higher after labor data

This morning, the Australian dollar traded higher after data showed that the Australian labor market deteriorated.

The Australian dollar traded firmer today, hovering near 0.6950 ahead of the US session as the USD weakened slightly mainly due to today’s rising commodity prices.

Australian labor market deteriorates

Earlier in the day, data showed that the Australian unemployment rate decreased to 3.4% from the 3.5% predicted and previous levels. On the other hand, the employment change decreased notably to -40,900 from 25,000 projected and 88,400 prior. Additionally, compared to earlier readings and market expectations of 66.8%, the participation rate dropped to 66.4%.

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It’s important to note that the Aussie Wage Price Index experienced the most robust growth since September 2014 in the second quarter (Q2), growing by 0.7% QoQ. The results are nonetheless depressing when compared to inflation data, which supports the Reserve Bank of Australia’s (RBA) recent cautionary remarks.

Taiwan-China-USA tensions continue

China’s Foreign Ministry also stated on Thursday that Beijing would take decisive steps to preserve its territorial integrity and urged the US not to make a mistake after Washington and Taipei decided to begin trade talks early this autumn. This follows objections from China’s Commerce Ministry.

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The US-Taiwan trade negotiations “will deepen our trade and investment relationship, advance mutual trade priorities based on shared values, and promote innovation and inclusive economic growth for our workers and businesses,” according to US Trade Representative (USTR) Deputy Sarah Bianchi in a statement made early on Thursday.

Fed remains hawkish

The FOMC meeting’s minutes were made available to the public yesterday. The minutes confirmed that the US officials had unanimously voted to hike rates by 75 basis points in July.

Moreover, the FOMC governors anticipate that the pace of interest rate growth would eventually decline, according to the minutes. It further mentioned that several Fed officials were worried about the prospect of tightening too much. Some members also suggested that for the policy rate to restrain inflation effectively, it would need to “remain for some time” at a “sufficiently restrictive” level.

Later today, investors will be watching Thursday’s routine US jobless claims as well as the August Philadelphia Fed Manufacturing Survey, which is predicted to improve slightly from 12.3 to -5. In addition, the number of sales of existing homes, which are expected to drop from 5.12 million to 4.89 million in July, will also be disclosed.

If the pair breaks below 0.69, we might see a decline toward 0.68 in the short term. On the other hand, a jump above 0.70 could send the pair to its 200-day moving average near 0.7140.

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