AUD/USD threatens 0.6500 as the US labour market softens

• AUD/USD rose near 0.6490 and consolidated above the 20-day SMA of 0.6473.
• The ongoing softness of the US labour markets makes investors bet on a less aggressive Fed.
• US yields dropped to a three-week low.

In Wednesday’s session, the AUD/USD gained traction, as the USD is trading weak against most of its rivals following fresh soft employment figures. On the Aussie front, Australia reported weak housing data during the Asian session, while the Monthly Consumer Price Index (CPI) dropped to 4.9% YoY.

The ADP Employment Change figures from the US missed the consensus in August. The figure came in at 177,000, while the markets expected 195,000, significantly lower than the last reading of 371,000. In addition, the Q2 Gross Domestic Product (GDP) was revised 
downwards to 2.1% YoY. The immediate reaction to the lower-than-expected ADPs and JOLTs from Tuesday was hopes that the tightening cycle from the Fed would end, which fueled a sharp decline in the 2,5 and 10-year yields to their lowest in three weeks. However, the CME FedWatch tool reflects that the odds of a hike in the November meeting slightly fell, but they remain high, around 44%. In addition, investors are pricing in that the Fed will cut rates sooner, in June 2024, which also weakens the USD.

That being said, before the September 20 meeting, the Fed will get an additional Nonfarm Payrolls (NFP) report this Friday, a Core Personal Consumption Expenditures (PCE) reading on Thursday and a Consumer Price Index (CPI) figures from August next Friday. Those inflation figures will likely weigh more on the Fed’s upcoming decisions.

 AUD/USD Levels to watch 

 The daily chart analysis indicates a neutral to bullish outlook for the AUD/USD in the short term. The Relative Strength Index (RSI) is below its midline in negative territory but with a positive slope, aligning with the negative signal from the Moving Average Convergence Divergence (MACD), which displays rising green bars, suggesting that the bulls are slowly regaining momentum. Additionally, bullish signals on the four-hour chart indicate a forceful buying momentum, establishing a marked bull dominance over sellers in the shorter time frame.

 Support levels: 0.6475 (20-day SMA), 0.6400, 0.6380.

 Resistance levels: 0.6500, 0.6525, 0.6540.

 AUD/USD Daily Chart