• RBA governor Michele Bullock said it was too early to think about near-term rate cuts.

• Private employment in the US was lower than expected in August.

• ISM PMI data showed improved business activity in the US services sector.

The AUD/USD outlook shows mild optimism after the Reserve Bank of Australia Governor maintained a hawkish tone in the previous session. At the same time, there was caution as markets eagerly anticipated the US monthly employment figures.

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On Thursday, RBA governor Michele Bullock said it was too early to think about near-term rate cuts. According to her, inflation in the country remains high, needing high rates for longer. Her remarks came despite data showing weak economic expansion in the second quarter. At the same time, Australia’s inflation cooled to 3.5% in July, nearing the central bank’s target range of 2-3%.

RBA policymakers have maintained a cautious tone while other major central banks cut rates. Officials argue that since the RBA did not raise rates as high as other major central banks, they need more time to tame inflation. Nevertheless, investors still price a 42% chance of a rate cut in November.

Meanwhile, the US dollar was bruised on Friday after mixed economic indicators. Data from the previous session revealed that private employment in the US was lower than expected. There were 99,000 new jobs, compared to forecasts of 144,000. Consequently, investors worried about a deteriorating labor market.

However, another report showed a bigger-than-expected drop in jobless claims, easing fears of a rapid decline. At the same time, ISM PMI data showed improved business activity in the services sector. All eyes are now on the nonfarm payrolls report. Experts believe the figure will miss forecasts, given recent employment indicators. Therefore, the dollar might collapse.

AUD/USD key events today

• US average hourly earnings m/m
• US nonfarm employment change
• US unemployment rate

AUD/USD technical outlook: Weak bullish price action

On the technical side, the AUD/USD price has risen to retest the 30-SMA resistance. The bullish move comes after the price found solid support at the 0.6700 key level. Despite this, bears remain in control, with the price below the SMA and the RSI under 50.

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Moreover, the bullish move shows weak price action consistent with a correction. Therefore, bears might emerge at the 30-SMA to push the price lower. A break below 0.6700 would create a lower low, strengthening the bearish bias.

https://www.forexcrunch.com/blog/2024/09/06/aud-usd-outlook-optimism-persists-after-hawkish-rba/