AUD/USD declined on Friday after a strong US jobs report lifted the greenback marginally across the board. The pair remains under some pressure at the start of a new trading week as the USD receives another mild boost from the latest labor market data.
The US non-farm payroll grew 304k in January, well above expectation of 165k. But the previous figure was revised sharply down from 312k to 222k. Moreover, average hourly earnings rose just 0.1% versus expectation of 0.3%. In fact, the dismal wages growth confirms the weaker inflation pressures in the US and justifies the recent dovish shift in the Federal Reserve’s tone. Accordingly, the buck failed to capitalize significantly on the data.
However, the aussie remains under the increasing pressure on Monday. Ahead of tomorrow’s RBA meeting, the latest report showed that Australian building permits fell 22.5% in December from a year earlier after plunging 33.5 percent in November. As a result, that was the worst two-month result since January-February 2009.
As for the RBA meeting, it looks increasingly likely that the central bank’s statement will be less upbeat than in December. Considering that other monetary authorities tend to soften their stance due to softer global growth outlook, the RBA may find it appropriate to act the same way and downgrades its GDP forecasts.
In this scenario, AUD/USD could weaken further but as the statement is expected to be more neutral than dovish, the bearish potential will likely be limited. As such, the pair could get back below 0,72 but stay above the 0.7070 region.