AUD to USD Forecast: Australian Dollar to Navigate a Trade Surplus and US Labor Data

Highlights

• AUD/USD gained 0.37% on Wednesday, partially offsetting Tuesday’s 0.96% drop, ending at $0.63250.
• Australian August trade data poised to capture investors, with a predicted surplus growth.
• US jobless claims in focus after weak ADP Nonfarm data, hinting at Fed’s next moves.

Wednesday Overview

On Wednesday, the AUD/USD gained 0.37%. Partially reversing a 0.96% loss from Tuesday, the Aussie dollar ended the day at $0.63250. The Aussie dollar fell to a low of $0.62865 before rising to a high of $0.63425.

Australian Trade Data in Focus

On Thursday morning, Australian trade data for August will garner investor interest. Economists forecast the Australian trade surplus to widen from A$8.039 billion to A$8.725 billion. While the import and export figures need consideration, the AUD/USD will likely show sensitivity to trade terms with China.

China accounts for one-third of Australian exports. Weak demand would impact the Aussie Dollar, the Australian economy, and the Australian labor market. The Australian trade-to-GDP ratio is above 50%, with 20% of the workforce in trade-related jobs.

US Jobless Claims in the Spotlight after Weak ADP Nonfarm Numbers

Later today, US initial jobless claims need consideration. A spike in jobless claims may raise fears of a lackluster US Jobs Report. Economists forecast an increase from 204k to 210k. Investors will likely consider sub-220k supportive of the hawkish Fed rate path.

A deterioration in labor market conditions would adversely impact wage growth. Softer wage growth and an elevated interest rate environment may weigh on consumption. A weaker consumer spending trend could ease demand-driven inflation and bets on a more aggressive interest rate path.

A hawkish interest rate path impacts labor market conditions and disposable income, forcing consumers to curb spending.

Beyond the numbers, FOMC members will also influence investor appetite for the US dollar. FOMC members Loretta Mester, Thomas Barkin, Mary Daly, and Michael Barr are on the calendar to speak today. As a voting member, Michael Barr may have more sway over investors.

Short-Term Forecast

Monetary policy divergence remains in favor of the US dollar despite the pullback on Wednesday. However, a spike in US jobless claims may offer AUD/USD support ahead of the US Jobs Report. Australian trade terms with China must improve to deliver AUD/USD gains.

AUD/USD Price Action

Daily Chart

The AUD/USD remained below the 50-day and 200-day EMAs, affirming bearish price signals.

An AUD/USD breakout from $0.6350 would support a move to the $0.63854 resistance level. A wider Australian trade surplus and a spike in US jobless claims would likely deliver a positive AUD/USD session.

However, a modest increase in US jobless claims and hawkish Fed comments would test buyer appetite. A break below the trend line would give the bears a run at the $0.62749 support level.

A 14-period Daily RSI reading of 38.12 suggests an AUD/USD fall through the trend line before entering oversold territory (typically below 30 on the RSI scale).

4-Hourly Chart

The AUD/USD sits below the 50-day and 200-day EMAs, reaffirming bearish price signals.

A return to $0.6350 would give the bulls a run at the 50-day EMA and $0.63854 resistance level. Selling pressure will likely intensify at $0.63765. The 50-day EMA is confluent with the $0.63854 resistance level.

However, a fall below the trend line would support an AUD/USD move to the $0.62749 support level.

The 14-period 4-Hourly RSI at 37.66 indicates an AUD/USD break below the trend line before entering oversold territory.