Australian Dollar retreats as weak jobs data weighs on RBA rate outlook

The Australian Dollar (AUD) weakened by 0.22% on Thursday, trading near 0.7110, as an unexpected rise in job losses weighed on the Reserve Bank of Australia (RBA) outlook. In July, Australia saw a decrease of 15.8K jobs, surpassing expectations of a 15K increase. The unemployment rate rose to 4.5% from 4.4% the previous month, both figures above market expectations.

This data casts doubt on the need for further RBA rate hikes to tackle inflation, as previously anticipated by Deputy Governor Andrew Hauser. BBH's Elias Haddad believes the deteriorating labor market reinforces the notion that the RBA should maintain a wait-and-see approach. Despite the weaker labor market, Australia's attractive carry benefits, commodity exposure, and strategic links to energy, AI, and defense still provide solid support for the AUD.

The US Dollar (USD) remains under pressure, trading below 99.00, due to the Federal Reserve's decision to increase liquidity support for long-term government securities. This move, coupled with a retreat in 30-year US Treasury yields, adds to the AUD's resilience. Technical analysis indicates a near-term bullish bias for AUD/USD, with support levels at 0.7095, 0.7101, and 0.7081, and resistance at 0.7130 and 0.7200.