Australian Dollar: Labor data underpins RBA hike view – BBH
Brown Brothers Harriman’s (BBH) Elias Haddad observes AUD/USD trading near its 200-day moving average support as broad Dollar strength weighs on the pair.
Australian Dollar (AUD/USD) is trading close to its 200-day moving average support, with Brown Brothers Harriman's (BBH) Elias Haddad noting the pair's vulnerability to broad Dollar strength. The recent August labor force report in Australia revealed a stronger-than-anticipated job increase and elevated participation rate, bolstering the likelihood of a 25 basis point Reserve Bank of Australia (RBA) hike to 4.60% next week.
BBH's Haddad predicts more RBA tightening and commodity exposure as beneficial factors for the Australian Dollar (AUD). The report showed that the economy added 39.5k jobs in August, surpassing expectations of 20k and prior expectations of -15.9k. The unemployment rate unexpectedly rose to 4.6%, exceeding consensus forecasts and the RBA's year-end projection of 4.5%.
Despite this, a higher participation rate suggests that some labor market tightness persists. The odds of additional RBA rate hikes are increasing, which narrows policy divergence with the Federal Reserve and supports the AUD/USD pair. Additionally, Australia's strategic exposure to commodities related to energy, artificial intelligence, and defense remains a significant long-term tailwind for the AUD.
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