The Australian dollar reversed directions and pushed above the 72 line. In the North American session, AUD/USD was trading at 0.7224, up 0.54% on the day.
Australia released December employment numbers in Thursday’s Asian session. The economy was expected to have created 43 thousand new jobs, which would be a modest gain compared to the monster spike of 366 thousand in November. The market was also projecting that the unemployment rate would tick lower to 4.5%, from the 4.6% beforehand. The strong release should likely give a boost to the Australian dollar.
Earlier, Australia’s Westpac Consumer Sentiment for January disappointed with a reading of -2.0%, marking a second straight decline. Consumers are wary that the spike in Omicron cases could trigger further lockdowns. The number of hospital cases has swelled and on Tuesday, Australia recorded 77 deaths from COVID, the highest one-day total since the pandemic began.
An ANZ report last week noted that the Australian consumer is suffering from an “Omicron malaise in spending” and that could mean trouble for the Australian economy, as consumer spending is a key driver of growth. The major banks are planning to revise downward their growth forecasts and Commbank has already lowered its Q1 forecast QoQ from 2.3% to just 1.0%.
In the US, there are growing concerns that the Federal Reserve will accelerate the tightening of its policy. This has been reflected in an upswing in US Treasury yields. The 10-tear rate climbed above 1.80% on Tuesday, a 2-year high, and hit 1.90% earlier on Wednesday, but has retreated to 1.83%.
The 10-year rate hasn’t been above the symbolic 2% level since July 2019 but could reach that line shortly. Most analysts are projecting three or four rate hikes in 2022, but the Fed may have more in store. Jamie Dimon, CEO of JP Morgan, made headlines last week when he projected the Fed could hike up to six or seven times this year.
AUD/USD Technical
- There is resistance at 0.7304 and 0.7392
- AUD/USD has support at 0.7139 and 0.7062