Today, the Australian dollar advanced 0.3%, pushing the AUD/USD pair toward the 0.7250 level and returning into the upward channel.
Domestic job market stays strong.
The Australian employment change dropped notably in December, printing 64,800 , but it was more than double the expected amount of 30,000. The November reading stood at 366,000. At the same time, the unemployment rate improved markedly to 4.2% from 4.6% previously.
Moreover, full-time employment decreased to 41,500 from 128,000, while part-time jobs came out at 23,300, down from 237,000 previously. The participation rate stayed unchanged at 66.1%.
Before that, the Westpac Consumer Confidence for January dropped to -2.0%, below -1.0% in December, whereas the Consumer Inflation Expectations dropped to 4.4% in January versus 4.8% previously.
Additionally, the AUD has been supported by the recent People’s Bank of China move, as the Chinese central bank cut the one-year loan prime rate by 10-basis points to 3.70% at its January fixing. At the same time, the five-year rate was slashed by 5-basis points to 4.6% in January . The five-year rate was cut for the first time since April 2020. In December 2021, the one-year rate was cut from 3.85% to 3.80%. So it looks like more easing will come.
During the US session, existing home sales for December are seen slowing somewhat. In addition, jobless claims will also be released, along with the Philadelphia fed manufacturing survey for January.
Short-term seems bullish
Technically speaking, the AUD/USD pair is back in its uptrend channel, with the recent breakdown below the trend line proving to be a bearish trap.
As long as the Aussie stays within the channel, the short-term outlook seems bullish, with the next target probably in the 0.73 region, where this year’s highs are seen.
Alternatively, the support will likely be found at this week’s lows near 0.7170. If not held, the Aussie might drop below 0.7150, possibly targeting the 0.71 threshold.
The USD has failed to capitalize on the rising yields recently, likely sending a bearish signal for the greenback as the rate hike cycle might be already priced in.