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AUD to USD Forecast: Trade Data Impact, China’s PMIs, and US Jobs Report Influence

By:
Bob Mason
Published: Apr 5, 2024, 00:58 GMT+00:00

Key Points:

  • On Friday, April 5, Australian trade data garnered investor interest after better-than-expected PMI numbers from China.
  • The Australian trade surplus narrowed from A$11.027 billion to A$7.280 billion on falling exports.
  • Later in the session, the US Jobs Report will impact near-term trends for the AUD/USD.
AUD to USD Forecast

Australian Trade Surplus Narrowed in February

On Friday, Australian trade terms were in the spotlight. Australia has a trade-to-GDP ratio of over 50, with 20% of the workforce in trade-related jobs. Trade terms impact the Australian economy and the Aussie dollar.

In February, the Australian trade surplus narrowed from A$11.027 billion to A$7.280 billion.

According to the ABS,

Exports of goods slid by 2.2% month-on-month in February.

  • Non-monetary gold exports tumbled 21.9% (A$756 million).
  • Rural goods exports declined by 4.5% (A$267 million).

Imports of goods surged 4.8% in February.

  • Intermediate and other merchandise goods imports surged 9.5% (A$1,414 million).
  • Consumption goods imports rose by 2.8% (A$325 million).
  • Non-monetary gold imports increased by 7.2% (A$59 million).

The trade data was Aussie dollar price negative. However, recent PMI numbers from China could limit the effect of the trade data on the Aussie dollar. The import figures suggested a shift in the demand environment.

China accounts for one-third of Australian exports. An improving demand environment could improve Australian trade terms. The China Caixin Manufacturing PMI increased from 50.9 to 51.1 in March.

US Economic Calendar: US Jobs Report and the Fed

The all-important US Jobs Report will impact investor bets on a June Fed rate cut and the AUD/USD. Average hourly earnings, nonfarm payrolls, and the US unemployment rate will warrant investor attention.

A steady unemployment rate and a surge in nonfarm payrolls could support wage growth. Upward wage growth trends may raise disposable income, fueling consumer spending and demand-driven inflation. The Fed could respond by delaying rate cuts to reduce disposable income and curb consumer spending.

Economists forecast nonfarm payrolls to increase by 200k in March after rising by 275k in February. While economists expect the US unemployment rate to remain at 3.9%, economists predict average hourly earnings to increase by 4.1% year-on-year. In February, average hourly earnings rose by 4.3% year-on-year.

With the US Jobs Report in the spotlight, FOMC member commentary could move the dial. FOMC members Thomas Barkin, Susan Collins, and Michelle Bowman are on the calendar to speak. Views on the US Jobs Report and the timing of a Fed rate cut need consideration.

Short-Term Forecast

Near-term AUD/USD trends hinge on the US Jobs Report and FOMC member speakers. Better-than-expected US labor market data and hawkish Fed commentary could tilt monetary policy toward the US dollar.

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 $0.66 handle would support a move toward the $0.66500 handle. A break above the $0.66500 handle could bring the $0.67003 resistance level into play.

The US Jobs Report warrants attention.

Conversely, an AUD/USD drop below the 200-day EMA and $0.65760 support level could signal a fall through the 50-day EMA. A break below the 50-day EMA would bring the $0.64582 support level into view.

Given a 14-period Daily RSI reading of 56.26, the AUD/USD could return to the $0.66500 handle before entering overbought territory.

AUD to USD Daily Chart sends bullish price signals.
AUDUSD 050424 Daily Chart

About the Author

Bob Masonauthor

With over 20 years of experience in the finance industry, Bob has been managing regional teams across Europe and Asia and focusing on analytics across both corporate and financial institutions. Currently he is covering developments relating to the financial markets, including currencies, commodities, alternative asset classes, and global equities.

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