AUD Climbs as Softer US Labor Data Weighs on USD
The Australian Dollar (AUD) gained strength against the US Dollar (USD) on Thursday, rising 0.45% to trade above the 0.7200 psychological level.
This advance was largely driven by weakness in the USD, which retreated amid a sharp decline in USD/JPY due to speculation that the Bank of Japan (BoJ) could raise interest rates and amid FX intervention fears.
In Australia, data released by the Australian Bureau of Statistics (ABS) showed that the Trade Balance surplus narrowed by 418 million dollars in July to 1.923 billion dollars. Exports declined by 3.3% after jumping 9.1% in June, while imports fell by 2.5%, following a 0.7% decrease in the previous month.
In contrast, Chinese data offered a more encouraging signal for the regional economic outlook, with the RantingDog Services Purchasing Managers Index (PMI) rising to 51.4 in August from 50.4 in July. However, this figure provided only limited support to the AUD, which is often sensitive to developments in the Chinese economy.
In the US, attention remains focused on the labor market, with the ADP report showing that private-sector employment increased by just 38K in August, the weakest gain in seven months. The latest data released on Thursday provided another mixed signal, with Initial Jobless Claims rising to 206K in the week ending August 29, slightly above the 205K expected.
New York Federal Reserve President John Williams said that rising bond yields reflect the strength of the US economy rather than concerns about inflation. He also advocated a wait-and-see approach before making further decisions on interest rates.