AUDUSD rallies towards 0.6450s following an upbeat US employment report

• The AUDUSD soars more than 2% on Friday and prepares to finish the week with gains of 0.50%.
• The US Nonfarm Payrolls report exceeded estimates, while the Unemployment Rate pushed upwards, weakening the USD and bolstering the AUD.
• AUDUSD Price Analysis: Gains 150-pips and consolidates around 0.6440-50 as the RSI enters the overbought territory.

The AUDUSD is surging toward 0.6420s following the release of US employment data, which underscores Fed worries about the narrow labor market, with the United States economy adding more jobs than expected, while the Average Hourly Earnings remained unchanged close to 5% YoY, adding to inflationary pressures. At the time of writing, the AUDUSD is trading at around 0.6440-55 after hitting a daily low of 0.6285.

The AUDUSD jumped on upbeat US Nonfarm Payrolls report

On Friday, the US Department of Labor reported that the US economy added 261K jobs in October, smashing estimates of 193K, justifying the need for further Federal Reserve (Fed) aggression, even though the Federal Funds rate (FFR) is already at the 3.75-4% range. Although Fed Chair Jerome Powell mentioned the bank’s intention to slow the pace of rate increases, he said that the peak of rates would be higher than September’s Summary of Economic Projections (SEP) report.

Digging a little deep into the report, the Unemployment Rate rose by 3.7%, shocked by a lower participation rate, while Average Hourly Earnings remained unchanged at 4.7% YoY.

Market’s reaction

The AUDUSD tanked on the headline release, as shown by the 5-minute chart, towards 0.6344 and shifted gears, rallying aggressively, clearing the psychological 0.6400 figure, and extending its gains towards the daily high at around 0.6452. Traders should be aware that the Relative Strength Index (RSI) sits at 83 at overbought conditions, suggesting that the AUDUSD might pull back before resuming its upward bias.

AUDUSD 5-minute chart