AUD to USD Forecast: US Jobs Report Impact and China Stimulus Bets

Highlights

• The AUD/USD declined by 0.45% on Friday, ending the session at $0.65725.
• On Friday, the US Jobs Report sent the Aussie dollar into negative territory.
• China stimulus bets and the US economic calendar are focal points on Monday.

Friday Overview of the AUD/USD

The AUD/USD declined by 0.45% on Friday. After a 0.82% rally on Thursday, the Aussie dollar ended the Friday session at $0.65725. The Australian dollar rose to a high of $0.66195 before falling to a low of $0.65579.

China stimulus Chatter and RBA Policy to Dictate Direction

The dovish RBA Rate Statement continued to pressure the Aussie dollar on Friday. Australian employment figures (Thurs) will dictate market bets on a December 2024 RBA rate cut. However, stimulus chatter from Beijing could have more impact.

Lackluster growth in China has raised expectations of more substantial stimulus to bolster the Chinese economy. A stimulus package would be a boon for the Australian economy, stemming from increased demand from China. China accounts for one-third of Australian exports. Australia has a trade-to-GDP ratio above 50%. A pickup in demand would also support the Australian labor market. 20% of the Australian labor market is trade-related.

US Consumer Inflation Expectations in Focus

This week, US inflation takes center stage before Wednesday’s Fed interest rate decision. On Monday, consumer inflation expectations for November will garner investor interest.

Economists forecast consumers to project inflation to accelerate from 3.6% to 3.8% in November. While the report traditionally has a limited influence on the US dollar, we expect more interest in the November report. The US CPI report is out on Tuesday, after the latest US Jobs Report eased bets on a March Fed rate cut.

An uptick in consumer inflation expectations could force the Fed to maintain a hawkish rate path. A hawkish rate path would impact borrowing costs and reduce disposable income. Downward trends in disposable income would affect consumer spending and dampen demand-driven inflation.

Short-Term Forecast

Near-term AUD/USD trends will hinge on the US CPI Report (Tues) and the Fed interest rate decision and projections. More bullish projections and hawkish forward guidance could pressure the Aussie dollar and support a fall below the $0.65 handle.

AUD/USD Price Action

Daily Chart

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

An AUD/USD move through the $0.66162 resistance level would give the bulls a run at the $0.67 handle.

China stimulus chatter and the US economic calendar will be focal points.

However, a fall through the 200-day EMA and trend line would bring the 50-day EMA and the $0.64900 support level into play. Buying pressure could intensify at $0.65700. The 200-day EMA is confluent with the trend line.

A 14-period Daily RSI reading of 54.08 indicates an AUD/USD move to the $0.66500 handle before entering overbought territory (typically above 70 on the RSI scale).

4-Hourly Chart

The AUD/USD sat below the 50-day EMA while holding above the 200-day EMA, sending bearish near-term but bullish longer-term price signals.

An AUD/USD break above the 50-day EMA would support a move to the $0.66162 resistance level.

However, a break below the trend line would give the bears a run at the 200-day EMA.

The 14-period 4-Hourly RSI at 44.80 indicates an AUD/USD fall to the 200-day EMA before entering oversold territory.