AUD/USD stays defensive around 0.6250 on mixed Australia employment, NAB data

• AUD/USD struggles for clear directions while staying low of late.
• Australia’s Employment Change rose less than expected, Unemployment Rate steadied in September, Q3 NAB Business Confidence improved.
• Bond bears take a breather after yields rally to multi-year high, restrict immediate downside of the pair.
• PBOC’s Interest Rate Decision, risk catalysts will be crucial for clear directions as bears keep the reins.

AUD/USD remains on the back foot around 0.6250 despite mixed Aussie statistics as risk-aversion and hawkish Fed bets propel the US dollar during Thursday. The Aussie pair’s resistance to refresh the weekly low could be linked to the anxiety ahead of the People’s Bank of China’s (PBOC) monetary policy meeting.

Australia’s headline Employment Change rose 0.9K versus 25K expected and 33.5K prior while the Unemployment Rate and Participation Rate matched market forecasts of printing 3.5% and 66.6% figures respectively.

Also read: Breaking: Aussie jobs sinks AUD as headline misses the mark

It should be noted that the National Australia Bank's (NAB) quarterly Business Confidence figures rose to 9 versus 5 expected and 7 prior and restricts the AUD/USD pair’s immediate downside.

Also challenging the AUD/USD pair sellers are the sluggish Treasury yields as the bond traders take a breather after a volatile day. That said, US 10-year Treasury yields refreshed a 14-year high to 4.14% yesterday, around 4.13% by the press time, as market players rushed towards the risk-safety. The same weighed on the Wall Street and S&P 500 Futures afterward.

Fears of higher inflation and the central bank’s aggression joined downbeat headlines from China and the UK to weigh on the risk appetite and the AUD/USD.

As per the CME’s FedWatch Tool, markets price in around a 95% chance of the Fed’s 75 bps rate hike in November. The hawkish Fed wagers seem to justify the upbeat comments from the Federal Reserve (Fed) policymakers and raise fears of economic slowdown.

Recently, Chicago Fed President Charles Evans said that (they) need to make sure inflation pressures don't broaden further, which in turn suggests more rate hikes despite the recession woes. It should be noted that the Fed’s Beige Book added to the market’s fears by showing increased pessimism among the respondents.

Looking forward, the PBOC interest rate decision may act as another downside filter for the AUD/USD pair as it is likely to keep the benchmark rate unchanged at 3.65%. However, the sour sentiment and hawkish Fed bets, versus the Reserve Bank of Australia’s (RBA) reluctance to go strong with rate hikes, can keep the AUD/USD directed towards the south.

Technical analysis

Bears remain in the driver’s seat unless the quote defies a six-week-old descending trend channel, by surpassing the 0.6285 hurdle.