The AUD/USD currency pair has rebounded, recovering its intraday losses after hitting a fresh two-week low slightly below the critical 0.6700 support level during Wednesday’s European session. The Australian dollar regained ground as the US dollar corrected moderately following a rise to a two-week high. The US Dollar Index (DXY), which measures the US dollar against six major currencies, retreated from recent highs of 102.00 to around 101.60.
Market sentiment remains cautious and risk-averse, with investors focused on the upcoming US Nonfarm Payrolls (NFP) data for August, set to be released on Friday. The S&P 500 futures continued their downward trend from Tuesday, reflecting a decline in risk appetite among market participants.
The US labor market data is crucial as it will influence the Federal Reserve’s decision on interest rate cuts at the September meeting. Fed Chair Jerome Powell’s recent remarks at the Jackson Hole Symposium emphasized the central bank’s priority in preventing job losses, noting that inflationary pressures are gradually aligning with the Fed’s 2% target.
Before the NFP release, attention will also be on the US JOLTS Job Openings data for July, expected at 14:00 GMT. Economists forecast that US employers posted 8.1 million job openings, slightly down from 8.184 million in June.
On the Australian front, the Aussie dollar recovered from losses triggered by mixed Q2 Gross Domestic Product (GDP) data. The report showed that the Australian economy grew by 0.2% in the second quarter, below the expected 0.3% but consistent with an annualized growth rate of 1%, in line with forecasts but slower than the previous quarter’s upwardly revised 1.3%.
Looking ahead, investors will turn their attention to Reserve Bank of Australia (RBA) Governor Michele Bullock’s speech on Thursday. Market participants will be looking for clues on whether the RBA will shift towards policy normalization this year, which could significantly impact the AUD.
Trade Idea:
Consider a long position on AUD/USD near 0.6720, targeting 0.6800 with a stop-loss at 0.6680. The pair’s recovery and potential dovish signals from the Fed, alongside mixed Australian GDP data, could support further upside for the AUD.