AUD/USD keeps post-Fed gains below 0.7200 on upbeat Australia employment data

• AUD/USD reverses pullback form weekly high after Aussie data, holds Fed-linked run-up.
• Australia Unemployment Rate dropped, Employment Change rallied in November.
• RBA’s Lowe showed readiness to keep rates low, cited needs for 4.0% wage growth, full employment for rate hike.
• Second-tier US data, including Preliminary PMIs for December, can offer additional direction but ECB is the key.

AUD/USD picks up bids to 0.7172, extending the post-Fed increase as the Australia Employment report for November flashed welcome signs during early Thursday. Adding to the pair’s advances could be the market’s preparation for the European Central Bank (ECB) monetary policy meeting and mixed concerns over the US stimulus and Omicron.

Australia Unemployment Rate dropped to 4.6%, below 5.0% forecast and 5.2% prior, whereas the Employment Change rose to 366.1K from +200K expected and -46.3K previous readouts. Further, the Participation Rate also crossed 65.5% market consensus and 64.7% prior with 66.1% figures.

Read: Aussie Unemployment Rate big beat supports AUD/USD

Earlier in the day, RBA Governor Philip Lowe rejected the rate hike in 2022 while also saying, “Prepared to keep rates low if domestic economy requires it.” “Would like to see wages growing at 4% and full employment,” the RBA Boss added.

Furthermore, Australia’s Commonwealth Bank (CBA) released preliminary PMI data for December. The activity numbers showed Manufacturing gauge rose past 57.1 forecast to 57.4 but easing below 59.2 previous readouts. Further, the Services PMI also stepped back from 55.7 to 55.1, dragging the Composite PMI to 54.9 from 55.7, versus 53.7 market consensus.

Given the firmer Aussie jobs report keeping RBA rate hike expectations on the table, as Lowe said, “If other central banks tightening would increase probability of us following,” AUD/USD bulls keep controls by the press time.

It’s worth noting that the stimulus hopes from the US and mildly bid S&P 500 Futures also help the AUD/USD prices. On the same line are the likely preparations of the US dollar bulls to retake controls after the ECB meeting, with bearish expectations.

Moving on, preliminary readings of the monthly PMIs and Omicron updates will also be watched in addition to the ECB for clearer direction.

Read: European Central Bank Preview: More recalibration or actual tightening?

Technical analysis

AUD/USD portrays an inverse head-and-shoulders bullish chart pattern on the four-hour play, with 0.7170 acting as the neckline, a break of which will direct the quote towards crossing the 200-SMA level of 0.7234 to aim for mid-November swing high near 0.7370. Meanwhile, the monthly horizontal support near 0.7090 can test the bears before directing them to the yearly low near 0.6990.