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At 0.6560, AUD/USD Begins the Week with Extending Losses
The AUD/USD pair loses ground as the US dollar rises in response to Friday's stronger NFP data. March Nonfarm Payrolls in the United States increased by 303K, exceeding expectations by 200K. Additional increases in the price of copper and oil may provide support for the Australian dollar.
AUD/USD begins the week with a second consecutive session of extending losses, trading around 0.6560 lower during the Asian session on Monday. A rise in US Treasury yields provides support for the strengthening of the US Dollar (USD), which consequently applies a downward force on the AUD/USD pair.
As of this writing, the US Dollar Index (DXY) is trading at approximately 104.40, fueled by an unexpectedly positive outcome from the Nonfarm Payrolls (NFP) report. The robust performance of the labor market, as evidenced by the March report that exceeded expectations, strengthens the optimistic perspective regarding the US Dollar.
Despite the positive momentum in the U.S. economy, the Federal Reserve's (Fed) likelihood of implementing a rate cut in June remains high. The market maintains its estimation that a rate reduction is probable in June, with an approximate 70% probability, and further anticipates a cumulative easing of 75 basis points (bps) over the course of 2024.
As opposed to the anticipated 200,000, the US Bureau of Labor Statistics (BLS) reported a substantial increase of 303,000 jobs in March. The previous Nonfarm Payrolls (NFP) increase of 275,000 for February was, nevertheless, reduced to 270,000. In March, average hourly wages in the United States increased by 0.3% month-over-month, which was in line with expectations. The preceding figure stood at 0.2%. An annual growth of 4.1% was observed, which was consistent with the consensus of the market but marginally diminished from the preceding estimate of 4.3%.
It is probable that market participants are keeping a close eye on the escalation of copper and oil prices, as this may offer some assistance to the Australian Dollar (AUD). The Australian Dollar (AUD) encountered difficulties subsequent to the disclosure of unaltered Final Retail Sales and unfavorable Trade Balance figures from the country on Friday.
February marked the lowest Trade Surplus for Australia in five months, which was the result of a reduction in iron ore exports. The Reserve Bank of Australia (RBA) maintained its cash rate at 4.35 percent, a 12-year high, for the third consecutive meeting in March. Nonetheless, a prior warning that additional rate increases were not implausible was omitted by the RBA.
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