AUD/USD Daily Forecast: Chinese Economic Data and Aussie Jobs in Focus

Aussie Labor Market in Focus

On Thursday, August 15, Australian labor market data will influence buyer demand for the AUD/USD and the RBA rate path.

Economists forecast the unemployment rate to remain steady at 4.1% in July.

However, an unexpected fall in unemployment could further raise expectations of an RBA rate hike. Tighter labor market conditions may support wage growth, possibly increasing disposable income and consumer spending. Higher consumer spending trends could fuel demand-driven inflation.

Rising bets on an RBA rate hike could push the AUD/USD toward $0.70.

Expert Views on the Labor Market and the RBA Rate Path

AMP Head of Investment Strategy and Chief Economist Shane Oliver recently commented on the wage growth report, stating,

“2/3rds of jobs saw a yoy wage rise of 3%+. But qtrly priv wages grth has slowed, priv jobs getting a rise looks to have slowed, Q3 wages will rise less this yr & EBA wage rises look to have peaked. But, wages grth is still high v productivity grth so wil still leave RBA on edge.”

Despite holding rates steady in August, the RBA maintains a hawkish stance. RBA Governor Michele Bullock recently warned that the RBA will not hesitate to hike rates if inflation doesn’t cool.

Chinese Economy in the Spotlight

Later in the morning session, economic data from China could impact Aussie dollar demand.

Economists forecast industrial production to increase by 5.2% year-on-year in July, down from 5.3% in June.

Lower-than-expected figures could signal a weaker demand environment, possibly impacting the Aussie economy, the labor market, and the Aussie dollar.

The Australian economy remains dependent on demand from China. Australia has a trade-to-GDP ratio of over 50%, with China accounting for one-third of Aussie exports. Moreover, 20% of the Australian workforce is in trade-related jobs.

Weaker-than-expected numbers could also affect market risk sentiment, possibly pushing the AUD/USD toward $0.65000.

Other Key Stats

Retail sales figures from China also need consideration. A weaker domestic demand environment could further impact buyer demand for riskier assets, including commodity currencies like the Aussie dollar.

Economists expect retail sales to rise by 2.6% year-on-year in July, up from 2.0% in June.

US Economic Calendar

Later in the Thursday session, US jobless claims could retrigger fears of a US recession.

Economists expect initial jobless claims to increase from 233k in the week ending August 3 to 235k in the week ending August 10.

Deteriorating labor market conditions could impact wage growth, consumer confidence, and spending. Downward trends in consumer spending may adversely affect the US economy as it contributes over 60% to GDP.

Increasing bets on multiple 2024 Fed rate hikes may narrow the interest rate differential between the US and Australia, possibly pushing the AUD/USD toward $0.70.

However, rising threats of a hard US landing could trigger a flight to safety, impacting Aussie dollar demand.

Other Stats

Investors should also consider US retail sales figures on Wednesday.

Economists predict retail sales to rise by 0.3% in July, after stalling in June. An unexpected drop in retail sales may also fuel fears of a US recession.

Expert Views on US Inflation, the Labor Market, and the Fed

Arch Capital Global Chief Economist Parker Ross discussed a likely shift in the Fed’s focus from inflation to the labor market on Tuesday, saying,

“Altogether, if this week’s inflation data is roughly in-line with expectations, the Fed is more likely to be focused on the other side of its mandate (maximum employment) via releases like Thursday’s retail sales, housing data later in the week, and upcoming labor market data.”

Parker Ross suggests that the US jobless claims data, due on Thursday, could impact the Fed rate path more. An unexpected spike in US jobless claims could also retrigger investor fears of a hard US economic landing.

Short-Term Forecast: Bullish

Near-term AUD/USD trends will hinge on the Aussie and US labor market data. A tighter Aussie labor market and looser US labor market conditions could push the AUD/USD toward $0.70 on narrowing interest rate differentials. Conversely, tight US labor market conditions could drag the AUD/USD below the $0.65500 handle.

Investors should remain alert, with economic data and central bank commentary influencing AUD/USD price trends. Monitor the real-time data, news updates, and expert commentary to adjust your trading strategies.

Stay updated with our latest views and analysis to manage exposures to the forex markets.

AUD/USD Price Action

Daily Chart

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

A break above the 200-day and 50-day EMAs could support a move toward the top trend line. A breakout from the top trend line could give the bulls a run at the $0.67003 resistance level.

Aussie labor market data, China’s economic indicators, and US data require consideration on Thursday.

Conversely, a break below the $0.65760 support level may support a fall through the $0.65500 handle. A fall through the $0.65500 handle could bring sub-$0.65000 levels into play.

With a 14-period Daily RSI reading of 49.97, the Aussie dollar may drop below the $0.65760 support level before entering oversold territory.