Aussie Dollar Falls to Seven-Week Low Amid Strong US Data and Global Bond Rout
The Australian and New Zealand dollars have fallen to multi-week lows due to strong US economic data and a global bond market rout. The greenback has surged, with the Aussie dollar dropping 1% overnight to $0.7025, its lowest level in seven weeks.
This decline broke through multiple moving averages, turning the technical outlook bearish and potentially leading to a retreat to $0.6920 or $0.6866. The kiwi dollar also fell 1%, reaching $0.5676, with some analysts predicting it may test its June low at $0.5627.
The job market in Australia showed a surprise rebound of 39,500 jobs in August, exceeding forecasts. However, the unemployment rate rose to a five-year high of 4.6%, indicating that more people are entering the labor force. This data will likely influence the Reserve Bank of Australia's decision on interest rates.
Economist Oscar Guth noted that inflation pressures extend beyond the labor market, with oil prices above $100 a barrel and core inflation stuck at 3.6%. With unemployment still within the range outlined by RBA Governor Michele Bullock (4.5% to 5%), markets imply a 95% chance of a 25 basis point rate hike next week.