The Australian dollar is showing limited movement on Thursday. In the European session, AUD/USD is trading at 0.6412, down 0.12% on the day.
Australia job growth surges
Australia's economy added 89 thousand jobs in April, blowing past the market estimate of 20 thousand and above the upwardly revised gain of 36.4 thousand in March. Full-time employment was up an impressive 59.5 thousand. The unemployment rate was unchanged at 4.1%.
Today's jobs report indicates that the labor market remains strong, but that is not expected to change minds at the Reserve Bank of Australia. The money markets have priced in a quarter-point cut at next week's meeting, which would lower the cash rate to 3.85%.
RBA widely expected to lower rates next week
The central bank is expected to cut rates in response to weakening inflation and the uncertainty over US tariffs. Australia's reliant economy could take a significant hit if the US and China trade war continues, which makes the recent tariff deal between the two countries a welcome first step. The agreement, which slashes tariff rates between the US and China, is valid for 90 days and negotiations will continue during that time. Only a few weeks ago, escalating trade tensions threatened to spill into a global trade war but the US has taken a step backwards, reaching a trade deal with the UK and a truce with China.
President Trump's erratic trade policy has roiled the financial markets and made it difficult for the RBA to make inflation and growth forecasts. Still, the RBA appears ready to lower rates next week, which will boost domestic growth. The central bank is expected to remain cautious in its rate policy in the turbulent global economic environment. At home, the labor market has been resilient, inflation is generally under control but consumer spending has been weaker than expected.
AUD/USD technical
- AUD/USD has pushed below support at 0.6426 and is testing support at 0.6410. Below, there is support at 0.6398.
- There is resistance at 0.6438 and 0.6454.
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