AUD/USD Daily Forecast: Upbeat Trade Data and Bullock’s Speech Could Push Pair to $0.68

Aussie Trade Terms in Focus

On Thursday, September 5, trade data from Australia will likely influence buyer demand for the AUD/USD pair.

Economists expect the Australian trade surplus to narrow from A$5.589 billion in June to A$5 billion in July.

A more marked narrowing to the trade surplus could affect the Aussie economy, given its trade-to-GDP ratio of over 50%. However, investors should also consider the import and export trends. Higher import and export trends could signal an improving demand environment, possibly boosting the Aussie economy and the Aussie dollar.

Will the RBA Maintain Its Hawkish Stance?

Later in the morning, RBA Governor Michele Bullock is on the calendar to speak. Governor Michele Bullock’s views on inflation, wage growth, and the RBA rate path could significantly impact the AUD/USD pair.

While inflationary pressures eased in June, the annual inflation rate remains well above the RBA’s 2-3% target range.

Expert Views on the Australian Economy

AMP Head of Investment Strategy and Chief Economist Shane Oliver commented on Wednesday’s Australian GDP numbers, stating,

“Aust remains deep in per capita recession with per capita GDP -0.4%q/-1.5%y & down in 7 of last 8 qtrs. Outside the pandemic this is the worst since early 90s & highlights that on avg Australians have cut their spending, but record pop grth (+2.5%yoy) is still keeping GDP growing.”

Despite concerns about the effect of elevated interest rates on Australian households, inflation trends could leave the RBA on a higher-for-longer rate path.

Upbeat trade data and a hawkish RBA Governor could push the AUD/USD toward $0.68.

US Economic Calendar

Later in the Thursday session, investors will turn their focus to the US labor market and services sector.

ADP Employment Change Crucial Ahead of the Jobs Report

Economists expect the ADP to report an employment increase of 145k in August, up from 122k in July.

Lower-than-expected employment figures could intensify fears of a US economic recession (hard landing). Weaker labor market conditions may affect wage growth, possibly curbing consumer spending, which contributes over 60% to GDP.

Moreover, a deteriorating labor market may increase the probability of a 50-basis point September Fed rate cut, possibly driving the AUD/USD toward $0.68. US dollar sensitivity to labor market data will likely be heightened as Friday’s US Jobs Report looms.

Initial Jobless Claim Trends in Focus

Economists predict initial jobless claims will slip from 231k in the week ending August 24 to 230k in the week ending August 31.

An unexpected spike in jobless claims, toward 250k, could further fuel expectations of a hard landing.

Expert Views on the US Labor Market

Arch Capital Chief Global Economist Parker Ross considered recent unemployment data, stating,

“In summary, the spike in unemployment in July was not due to Hurricane Beryl and there doesn’t appear to be a common theme across the key drivers of the states, industries, or reasons for unemployment that makes them easy to write off other than the fact that temporary layoffs led the way. If the layoffs were indeed temporary, then we should see a decent recovery in unemployment in next week’s August jobs report.”

ISM Services PMI and the US Economy

Beyond the US labor market, investors should also consider service sector data as it accounts for over 70% of GDP.

Economists expect the ISM Services PMI will fall from 51.4 in July to 51.1 in August. A larger fall in the headline PMI could send recession signals, possibly raising bets on a 50-basis point September Fed rate cut.

A more dovish Fed rate path would typically drive buyer demand for the AUD/USD pair. Weaker-than-expected numbers without signals of a hard landing could drive the AUD/USD pair toward $0.68.

Expert Views on the US Services Sector

S&P Global Market Intelligence Chief Business Economist Chris Williamson commented on the preliminary Markit survey-based figures, stating,

“The solid growth picture in August points to robust GDP growth in excess of 2% annualized in the third quarter, which should help allay near-term recession fears.[…]. Service sector growth is constrained by hiring difficulties, which continue to push up pay rates and means overall input cost inflation remains elevated by historical standards.”

Williamson added that while inflation is slowly returning to normal levels, economic imbalances could still slow growth.

Short-Term Forecast: Bullish

Near-term AUD/USD trends will hinge on the trade data from Australia and remarks from RBA Governor Michele Bullock. Upbeat trade data and threats of an RBA rate hike could push the AUD/USD toward $0.68.

Investors should also consider the US economic calendar. Weaker data could also drive buyer demand for the AUD/USD, though hard US landing fears could cap gains.

Investors should stay alert to economic data and central bank commentary that may influence 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 hovered above the 50-day and 200-day EMAs, affirming bullish price signals.

A breakout from $0.67500 could give the bulls a run at the $0.67967 resistance level. Furthermore, a break above the $0.67967 resistance level could signal a move toward $0.68500.

Investors should consider the trade data from Australia, the US economic calendar, and central bank commentary.

Conversely, a drop below the $0.67003 support level may signal a fall toward the 50-day EMA.

With a 14-period Daily RSI reading of 51.55, the Aussie dollar could return to $0.68500 before entering overbought territory.