The Australian Dollar experienced a decline on Thursday as employment figures revealed a significant drop in Employment Change for February, which fell by 52,800. This stark contrast to the expected increase of 30,000 contributed to downward pressure on the AUD, which weakened against the US Dollar, reversing its earlier gains.
Despite the adverse employment report, the seasonally adjusted Unemployment Rate in Australia held steady at 4.1%, meeting market expectations. In another context, the People’s Bank of China announced that it would maintain its Loan Prime Rates, keeping the one-year rate at 3.10% and the five-year at 3.60%. These policy decisions reflect the central bank’s current approach to managing economic conditions.
In the United States, the Federal Reserve decided to keep the federal funds rate within the range of 4.25% to 4.5%, anticipating two rate cuts later in the year. This outlook, however, is tempered by the uncertainty surrounding tariff policies from the Trump administration, which continues to impact market sentiment.
The US Dollar Index showed signs of vulnerability, trading near 103.40 as it contended with pressure from declining US Treasury bond yields. Fed Chair Jerome Powell highlighted the solid conditions in the labor market, along with progress toward achieving longer-term inflation targets.
On the geopolitical front, recent discussions between the US and Russian leadership resulted in a temporary suspension of strikes against energy infrastructure in Ukraine. However, ongoing tensions remain, as talks about extending a broader ceasefire have not reached consensus. The Trump administration’s plans for additional tariffs in April, particularly targeting steel and aluminum, are also raising concerns among trade partners.
Treasurer Jim Chalmers voiced disapproval regarding US trade policies, criticizing them as detrimental to economic resilience and expressing disappointment over Australia’s exclusion from tariff exemptions. The Reserve Bank of Australia’s Assistant Governor hinted at a cautious stance regarding potential rate cuts, emphasizing the importance of monitoring US economic policies.
Currently, AUD/USD is trading around 0.6330, with technical indicators suggesting a weakening bullish trend after breaching an ascending channel pattern. The pair may face immediate resistance at the nine-day Exponential Moving Average of 0.6337. A failure to maintain momentum could lead to further declines, with immediate support identified at the 50-day EMA of 0.6312.
