- The AUD/USD outlook remains firm, reaching the 15-month top after the upbeat Australian jobs report.
- Recent data could push the RBA toward hikes, provided inflation remains elevated in next week’s data release.
- US Core PCE and Q3 GDP remain today’s major releases to find further directional bias.
The Australian dollar hit a 15-month high at USD 0.6800 on Thursday after Australia’s jobs report crushed expectations. The unemployment rate fell to 4.1%, lower than the 4.4% forecast, while employment jumped by 65.2k positions, well above the expected 30k. Full-time jobs added 54.8k, and total hours worked hit a record 2 billion. The participation rate also ticked up to 66.7%, showing more people actively looking for work.
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This has traders betting heavily on an RBA rate hike in February. Odds jumped from 29% to 57% overnight. Commonwealth Bank and NAB are already calling for it, saying the economy’s running too hot.
The strong labor market, combined with record-high house prices and solid consumer spending, suggests monetary policy isn’t as tight as the RBA thought after cutting rates three times last year to 3.6%.
But there’s a catch; inflation data drops next Wednesday, and that’ll make or break whether a hike actually occurs. If core inflation comes in above 3.2%, a rate hike looks locked in. Below that, the RBA probably sits tight.
Recent inflation gauges have been mixed. The TD-MI inflation index jumped to 3.5% in December, but headline CPI slowed to 3.4% in November. The RBA’s been patient, but this jobs data is forcing their hand if inflation stays sticky.
On the other hand, the US dollar held its ground around 98.80 on the index. Trump eased tensions by backing off tariff threats to Europe, which helped sentiment improve. But the Fed’s still in no rush to cut rates as they want to see inflation actually moving toward 2% before they budge. Most rate cuts aren’t expected until June at the earliest, with Morgan Stanley now forecasting only two cuts for the entire 2026.
The Aussie rally is solid on the jobs data, but it depends on next week’s inflation numbers confirming the case for a rate hike. Meanwhile, markets await today’s US Core PCE and Q3 GDP data for further impetus.
AUD/USD Technical Outlook: Bulls Fighting to Crack 0.6800
The AUD/USD 4-hour chart shows a strong bullish trend, with mild resistance near 0.6800. The pair could aim for the 2024 highs near 0.6950 while finding acceptance above 0.6800.
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However, the RSI has hit the overbought zone, suggesting slowing momentum, which could prompt profit-taking and push the pair to retest the broken supply zone near 0.6765 ahead of the 20-period MA at 0.6740.
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