Australian Dollar Rises on Weak US Jobs Data

The Australian Dollar (AUD) climbed to around 0.6955 against the US Dollar (USD) during Monday’s early Asian trading session. This rise came after the US Nonfarm Payrolls report for September fell short of expectations, showing only 29,000 new jobs compared to the anticipated 90,000. The weaker-than-expected jobs data weighed on the USD, boosting the AUD.

Markets now see a lower chance of a Federal Reserve (Fed) interest rate hike in October, with probabilities dropping to 22.1%, while the likelihood of a December hike remains high at 87.2%. On the Australian front, the Reserve Bank of Australia (RBA) is expected to keep rates steady in November, as softer inflation and housing market strains cap further rate hikes.

Analysts at Commerzbank argue that the RBA should adopt a cautious approach, noting that the housing sector is under pressure with falling building permits and declining prices in major cities. They suggest waiting to see how economic conditions evolve before making further rate adjustments, which could limit the AUD’s upside potential.

Meanwhile, Fed official Christopher Logan’s hawkish remarks have bolstered expectations of tighter monetary policy, supporting the USD. The FXS Fed Sentiment Index rose to 136.59, reinforcing the outlook for further rate increases. Technical analysis indicates that the AUD/USD pair remains in a bearish near-term trend, with key resistance levels at 0.7055 and 0.7070.