AUD/USD defies downside bias and advances towards 0.6770 on subdued Aussie job data

• AUD/USD is marching towards 0.6780 despite slightly lower-than-expected Aussie payroll data.
• The Australian economy has generated 33.5k jobs vs. the estimates of 35k.
• Aussie jobless rate has increased to 3.5% vs. expectations and prior release of 3.4%.

The AUD/USD pair as the Australian Employment Change has remained slightly lower than expectations. The economic data has landed at 33.5k vs. the expectations of 35k and the layoff of 40.9k employees reported in the July report. While the Unemployment Rate has increased to 3.5% against the forecast and the prior release of 3.4%.

A subdued Aussie employment data is not going to delight the Reserve Bank of Australia (RBA). The RBA won’t be able to hike rates without hesitation. It is worth noting that the RBA has already stepped up its Official Cash Rate (OCR) to 2.35%. RBA Governor Philip Lowe is bound to raise borrowing rates further to justify their foremost priority of containing the inflation mess.  Also, the guidance provided earlier, citing 3.85% as a current target for interest rates to combat the soaring price rise index will continuously trim liquidity from the economy.

Meanwhile, the US dollar index (DXY) has returned to the bullish territory after a lackluster performance. The DXY is aiming to recapture the psychological resistance of 110.00 ahead of the US Retail Sales data. As per the preliminary estimates, the economic data has not shown any growth in retail demand. A stagnancy in consumers’ demand will haunt the Federal Reserve (Fed) but be a sign of decline in the confidence of the consumers in the economy.

Meanwhile, a resurgence in odds of a full percent rate hike by the Fed has shifted the spotlight to the DXY. Higher-than-expected headline inflation data despite a significant decline in gasoline prices has created havoc for Fed policymakers. The Fed will continue announcing restrictive policies till it finds a decline in the inflation rate for a decent period.