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AUD/USD Justifies Its Status As a Risk Barometer Around 0.6670 As Recession Concerns Loom And US NFP Is Anticipated
AUD/USD remains despondent following a three-day losing sequence and aims to reverse the prior week's gains. Unfavorable US statistics and disappointing Fed research rekindle recession fears. The pause in the RBA's rate hike trajectory attracts Aussie pair sellers, while Governor Lowe and conflicting data encourage bears. In light of the lack of liquidity caused by Good Friday, the US employment report is eagerly awaited, and a disappointing outcome could spark a AUD/USD rebound.
AUD/USD remains on the radar of bears despite Good Friday's inaction prodding pair traders after a three-day decline. In doing so, the Aussie pair endures the weight of recession concerns and the dovish Reserve Bank of Australia (RBA) move as it prepares for a weekly loss ahead of the crucial US Nonfarm Payrolls report. (NFP).
The Aussie-U.S. dollar pair has declined for three consecutive days, accurately reflecting the market's pessimism regarding the economic transition in the world's largest economy, the United States, as well as the concerns of contagion emanating from the same. In addition to the US-induced recession problems, the RBA's halt of the rate increase cycle and mixed Aussie data weigh on the AUD/USD exchange rate.
On Wednesday, Australia's headline Trade Balance improved to 13,870 million compared to 11,100 million expected and 11,687 million previously. However, Exports and Imports fell to -3.0% and -9.0%, respectively, from 1.0% and 5.0% previously. In addition, China's Caixin Services PMI rose to 57.8 from 55.0 previously, which had been anticipated. In doing so, China's data reached their highest point since November 2020.
For the week ending March 31, Initial Jobless Claims in the United States increased to 228K from 200K expected and an upwardly revised 246K the previous week. Notable is that the Challenger Job Cuts for the given month increased from 77,77K to 89,703K. Previously, US JOLTS Job Openings fell to a 19-month low in February, and March's ADP Employment Change figures of 145K also disappointed markets. In addition, the US ISM Services PMI for March decreased to 51.2 compared to 54.5 anticipated and 55.1 previously.
As a result of Canberra's trade ties with Beijing, geopolitical concerns regarding US-China relations also influence on the AUD/USD exchange rate. Recent actions by the dragon nation have raised concerns about deteriorating relations between the world's two largest economies, the United States and China. On the same level are the Ukraine-Russia conflict, Moscow's struggle with the West, and North Korea's nuclear threat.
Wall Street benchmarks nurse their wounds as 10-year and 2-year US Treasury bond yields remain under pressure, despite their recent consolidation around 3.30 percent and 3.83 percent, respectively.
In the near future, the Good Friday holidays on key markets may limit AUD/USD movement. However, the presence of the US employment report can cause volatility, particularly in the context of a sparse market presence, necessitating greater caution from traders. Nonfarm Payrolls (NFP) are anticipated to decrease to 240K from 311K previously, with the unemployment rate remaining unchanged at 3.6%, according to market predictions. However, the contradictory forecasts for Average Hourly Wages make the outcome even more intriguing.
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