AUD to USD Forecast: Labor Market Data, the RBA Bulletin Impact, and Sub-$0.64

Australian Labor Market and RBA Bulletin in Focus

On Thursday, Australian labor market data will impact buyer demand for the AUD/USD.

Economists forecast employment to increase by 7.2k in March after surging 116.5k in February. Moreover, economists expect the unemployment rate to increase from 3.7% to 3.9%.

Weaker labor market conditions could impact wage growth and reduce disposable income. Downward trends in disposable income could affect household spending and dampen demand-driven inflation. A softer inflation outlook could allow the RBA to discuss interest rate cuts.

While the Australian labor market is in focus, the RBA Bulletin also needs investor consideration. Views on household consumption, inflation expectations, and the Middle East require investor attention.

In January, the RBA Bulletin highlighted a significant slowdown in household consumption. Since the January RBA Bulletin, the RBA discussed uncertainty about the outlook for household spending in consecutive press conferences. A negative outlook on household spending would raise bets on a Q3 2024 RBA rate cut.

Beyond the economic calendar, investors should monitor news updates from the Middle East. Threats of retaliation against the Saturday attack would impact buyer demand for the Aussie dollar.

US Economic Calendar: The Philly Fed, Jobless Claims, and the Fed

On Thursday, initial jobless claims and the Philly Fed Manufacturing Index will be in focus.

An unexpected spike in jobless claims may retrigger investor bets on a June Fed rate cut. Deteriorating labor market conditions could affect wage growth, consumer spending, and demand-driven inflation.

Economists forecast initial jobless claims to increase from 211k to 215k in the week ending April 13. Significantly, initial jobless claims have broken above 220k only twice in 2024.

Labor market conditions remain a consideration for the Fed. However, investors may react to a larger-than-expected fall in the Philly Fed Manufacturing Index. The markets are betting on the US avoiding an economic recession. Early cracks would influence market risk sentiment.

Economists forecast the Philly Fed Manufacturing Index to fall from 3.2 to 1.5 in April.

Beyond the numbers, investors should monitor Fed commentary. FOMC members John Williams, Michelle Bowman, and Raphael Bostic are on the calendar to speak. Views on inflation and the timing of a Fed rate cut could move the dial.

Short-Term Forecast

Near-term AUD/USD trends will remain hinged on Australian labor market data, stimulus chatter from Beijing, and Fed speakers. Softer Australian labor market conditions would tilt monetary policy divergence toward the US dollar. Nevertheless, a fiscal stimulus package from Beijing would boost buyer appetite for the Aussie dollar.

AUD/USD Price Action

Daily Chart

The AUD/USD hovered comfortably below the 50-day and 200-day EMAs, affirming the bearish price signals.

An Aussie dollar break above the $0.64582 resistance level would support a move to the $0.65 handle. A breakout from the $0.65 handle would give the bulls a run at the 50-day EMA.

Employment data from Australia, US data, Fed speakers, and geopolitical risks need consideration.

Conversely, an AUD/USD fall through the $0.64 handle could signal a move toward the $0.62713 support level.

Given a 14-period Daily RSI reading of 39.40, the AUD/USD may drop to $0.63500 before entering oversold territory.