Australian Dollar Talking Points
AUD/USD[1] is little changed from the start of the week following the kneejerk reaction to the larger-than-expected rise in the US Producer Price Index (PPI), and fresh data prints coming out of Australia may prop up the exchange rate as employment is expected to increase for the fifth consecutive month.
AUD/USD Rebounds from Weekly Low with Australia Employment on Tap
AUD[2]/USD[3] bounces back from a fresh weekly low (0.7392) even as the US PPI widens to 1.4% from 0.9% per annum in February, which exceeded projections for a 1.1% print, and the exchange rate may attempt to retrace the decline from the yearly high (0.7661) as it snaps the series of lower highs and lows seen during the previous week.
Look ahead, the update to Australia’s Employment report may generate a bullish reaction in AUD/USD as the economy is anticipated to add 40.0K jobs in March, while the jobless rate is expected to narrow to 3.9% from 4.0% during the same period, which would mark the lowest reading since the data series began in 1978.
Record-low readings of unemployment may sway the Reserve Bank of Australia (RBA) as the “central forecast is for the unemployment rate to fall to below 4 per cent this year and to remain below 4 per cent next year,” and the central bank may come under pressure to adjust the forward guidance for monetary policy at its next meeting on May 3 as “higher prices for petrol and other commodities will result in a further lift in inflation over coming quarters.”
Until then, AUD/USD may stage a larger recovery as it snaps the series of lower highs and lows from last week, but a further decline in the exchange rate may fuel the
