AUD to USD Forecast: Impact of US Labor Data and FOMC Decision on Currency Pair

Australian Manufacturing Sector in Focus

On Wednesday (May 1), Australian manufacturing PMI numbers could influence buyer appetite for the AUD/USD.

According to the preliminary figures, the Judo Bank Manufacturing PMI increased from 47.3 to 49.9 in April. An upward revision to the preliminary PMI could influence investor expectations of an RBA interest rate hike.

The manufacturing sector contributes less than 10% to the Australian economy. Nevertheless, an improving macroeconomic environment could raise growth forecasts for 2024. An upward revision would follow a better-than-expected China Caixin Manufacturing PMI, which revealed a marked boost in demand from overseas.

The pickup in demand for manufactured goods from China could boost the Australian economy and the Australian dollar. China accounts for one-third of Australian exports, with 20% of the Australian workforce in trade-related jobs.

US Economic Calendar: Jolts Job Openings, ADP Employment Change, and the Fed

Later in the session, the US labor market will be in focus before the FOMC interest rate decision and press conference.

Economists predict the ADP to report a 179k increase in employment in April after a 184k rise in March. However, economists forecast JOLTs Job Openings to fall from 8.756 million to 8.680 million.

A larger-than-expected fall in job openings and smaller-than-expected increase in employment could refuel bets on a September Fed rate cut. Weaker labor market conditions could impact wage growth and reduce disposable income. Downward trends in disposable income may affect consumer spending and dampen demand-driven inflation.

While the stats warrant investor attention, the FOMC interest rate decision and press conference will impact buyer demand for the AUD/USD. The markets expect the Fed to leave interest rates unchanged. However, views on inflation, the economic outlook, and the timing of an interest rate cut will move the dial.

Notably, the interest rate decision precedes the all-important US Jobs Report, which is out on Friday (May 3).

Short-Term Forecast

Near-term AUD/USD trends will hinge on the US labor market numbers and the FOMC press conference. Weaker-than-expected US labor market data could raise expectations of the Fed cutting rates before the RBA. Nevertheless, the FOMC press conference will dictate investor sentiment toward the Fed rate path.

AUD/USD Price Action

Daily Chart

The AUD/USD sat comfortably below the 50-day and 200-day EMAs, sending bearish near-term price signals.

An Aussie dollar return to the $0.65 handle would support a move to the 50-day EMA. A break above the 50-day EMA could give the bulls a run at the 200-day EMA and the $0.65760 resistance level.

US labor market data and the FOMC press conference need consideration.

Conversely, an AUD/USD fall through the $0.64582 support level would bring the $0.63500 handle into play.

Given a 14-period Daily RSI reading of 46.03, the AUD/USD could drop below the $0.64 handle before entering oversold territory.