AUD to USD Forecast: China Stimulus, the US Jobs Report, and $0.67

Thursday Overview of the AUD/USD

The AUD/USD gained 0.85% on Thursday. Following a 0.93% rally on Wednesday, the Australian dollar ended the session at $0.66200. The Australian dollar fell to a low of $0.65601 before rising to a high of $0.66245.

National People’s Congress and Stimulus

The National People’s Congress (NPC) will remain a focal point on Friday. During the first week of the NPC, lawmakers considered mixed economic indicators from China to consider. Service sector activity rose at a less marked pace, while exports surged in February.

Despite the unexpected jump in exports, Chinese lawmakers suggested the need for more stimulus to boost economic activity. As the NPC nears the end of its first week, investors must monitor updates. Discussions about a fiscal stimulus package would drive buyer demand for the Aussie dollar.

China accounts for one-third of Australian exports. Fiscal policy-fueled demand from China would support the Australian economy and the Aussie dollar. Australia has a trade-to-GDP ratio above 50%, with 20% of the Australian workforce in trade-related jobs.

Significantly, a pickup in demand from China could improve the RBA’s labor market and economic growth forecasts. The net effect could be an adjustment to the RBA rate path.

There are no economic stats from Australia or China to consider on Friday.

US Economic Calendar: The US Jobs Report

Later in the Friday session, the US labor market will be in the spotlight. The all-important US Jobs Report could dictate the Fed rate path through H1 2024. A hotter-than-expected US Jobs Report may delay the timeline for a Fed rate cut until H2 2024.

While nonfarm payrolls and the unemployment rate are focal points, investors must consider wage growth data. Tighter labor market conditions and higher wages could fuel consumer spending and demand-driven inflation. A higher-for-longer Fed rate path may reduce disposable income, curbing consumer spending.

Economists forecast average hourly earnings to increase by 4.4% year-on-year in February versus 4.5% in January. Moreover, economists expect a 200k increase in nonfarm payrolls and a steady unemployment rate of 3.7%.

Beyond the numbers, investors must monitor Fed chatter. Reaction to the US Jobs Report and possible influence on the Fed rate path would move the dial.

Short-Term Forecast

Near-term AUD/USD trends will hinge on the US Jobs Report and the National People’s Congress (NPC). A weaker-than-expected US Jobs Report and support for a fiscal stimulus package from Beijing would fuel demand for the AUD/USD. While the markets bet on a June Fed rate cut, the RBA remains willing to raise interest rates.

AUD/USD Price Action

Daily Chart

The AUD/USD sat above the 50-day and 200-day EMAs, sending bullish price signals.

An Aussie dollar return to the $0.66500 handle would support a move toward the $0.67286 resistance level.

NPC news, the US Jobs Report, and Fed chatter require consideration.

However, a break below the $0.66162 support level would bring the 200-day and 50-day EMAs into play.

A 14-period Daily RSI reading of 60.97 suggests an AUD/USD return to the $0.67 handle before entering overbought territory.

4-Hourly Chart

The AUD/USD hovered above the 50-day and 200-day EMAs, confirming the bullish price trends.

A break above the $0.66500 handle would give the bulls a run at the $0.67286 resistance level.

However, a drop below the $0.66162 support level would support a fall toward the 200-day and 50-day EMAs.

The 14-period 4-Hourly RSI at 74.80 shows the AUD/USD in overbought territory. Selling pressure could intensify at the $0.66500 handle.