Australian Dollar Forecast: Will AUD/USD Break $0.68? Key US Jobs Data Could Decide

Australian Housing Sector in Focus

On Friday, October 4, housing sector data from Australia may influence the AUD/USD and RBA rate cut bets. Economists forecast home loans to drop by 0.5% in August after an increase of 2.9% in July.

A fall in home loans could indicate weaker housing demand, potentially leading to higher inventories. Increasing housing supply may pressure house prices lower, which could reduce rents. Housing services inflation has been a significant inflation driver. However, falling rents may soften inflation, supporting a possible Q4 2024 RBA rate cut.

Furthermore, a deteriorating housing market could affect consumer confidence, potentially curbing private consumption. A pullback in private consumption would further soften inflation.

In the latest RBA press conference, RBA Governor Michele Bullock warned,

“Weaker than expected momentum in H1 2024 suggests there is some risk that consumption could remain more subdued than expected.”

Weak housing data may push the AUD/USD toward $0.68000.

Expert Views on the RBA Rate Path

AMP’s Head of Investment Strategy and Chief Economist, Shane Oliver, commented on recent housing inflation trends:

“Housing inflation remains an issue with rents +6.9%yoy and new dwelling costs +5%yoy…at least both have slowed from their peak. Key to solving this is to boost housing supply relative to underlying demand (from population growth).”

US Economic Calendar: US Jobs Report Under the Spotlight

Meanwhile, US economic data will likely influence the AUD/USD more than the Aussie data. Later in the Friday session, traders should shift their focus to the crucial US Jobs Report. Economists expect nonfarm payrolls to increase by 140k in September, following a 142k rise in August. Furthermore, economists forecast the US unemployment rate to hold steady at 4.2% in September.

Stronger-than-expected labor market data, including a fall in unemployment, may sink bets on a 50-basis point November Fed rate cut. A less dovish Fed rate path could support an AUD/USD fall below $0.68. Conversely, weak labor market data, such as a rise in unemployment or a sub-100k increase in nonfarm payrolls, could drive the AUD/USD toward $0.69.

Geopolitical Risk: Middle East Conflict Needs Monitoring

Beyond the economic calendar, investors should monitor news updates from the Middle East. An further escalation in the conflict could trigger a flight to safety, impacting Aussie dollar demand.

Short-Term Forecast for AUD/USD

Near-term AUD/USD trends will likely hinge on the central bank commentary and the US Jobs Report. Weaker US labor market conditions could signal aggressive Fed rate cuts.

A narrowing in the interest rate differential between the US and Australia could push the AUD/USD toward $0.69. However, upbeat US labor market data could dampen expectations for multiple Q4 2024 Fed rate cuts, potentially driving the AUD/USD below $0.68.

Investors should closely monitor central bank signals and economic indicators, which could influence AUD/USD trends. Traders should monitor real-time data, news updates, and expert commentary to adjust their trading strategies accordingly.

AUD/USD Technical Analysis

Daily Chart: AUD/USD Breakout Intact

Despite this week’s pullback, the AUD/USD remains comfortably above the 50-day and 200-day EMAs, sending bullish price signals.

A breakout from $0.68500 would support a return to $0.69. Furthermore, a return to $0.69 could give the bulls a run at the September 30 high of $0.69411.

Traders should consider the Aussie housing sector data, the US Jobs Report, central bank commentary, and updates from the Middle East, which may influence AUD/USD price movements.

Conversely, failure to breakout from $0.68500 could signal a fall toward the $0.68006 support.

With a 14-period Daily RSI reading of 55.96, the Aussie dollar could climb to the $0.69500 level before entering overbought territory.