Australian Dollar Strengthens on Weak US Jobs Data

The Australian Dollar (AUD) climbed to around 0.6955 in early Asian trading on Monday, benefiting from weaker-than-expected US jobs data. The US Nonfarm Payrolls report showed only 29,000 new jobs in September, well below the market forecast of 90,000, which weakened the US Dollar (USD) against the AUD.

Markets now assign a lower probability to a Federal Reserve rate hike in October, at 22.1%, while December remains more likely at 87.2%. Meanwhile, the Reserve Bank of Australia (RBA) is expected to keep interest rates unchanged in November, with the odds of a hike dropping to 20% following softer inflation data.

Analysts at Commerzbank argue that the RBA should exercise caution, pointing to declining housing permits and falling real estate prices in major cities. They suggest that further rate hikes could be premature, limiting the AUD's upward potential.

On the Fed side, Christopher Logan's hawkish remarks boosted expectations of tighter monetary policy, supporting the USD. Technical analysis indicates a bearish outlook for AUD/USD, with key resistance levels at 0.7055 and 0.7070.