AUD to USD Forecast: Aussie Trade Data and the US Labor Market in Focus

Australian Housing Sector and Trade Data in Focus

On Thursday (May 2), the Australian housing sector and trade data will put the AUD/USD in focus.

Improving housing sector conditions could influence consumer sentiment. A pickup in consumer confidence could fuel consumer spending and demand-driven inflation. Recent inflation figures from Australia impacted expectations of a 2024 RBA rate cut. A higher inflation outlook could rekindle investor bets on an RBA rate hike.

Economists forecast a 3.0% increase in building permits for March, following a decline of 1.9% in February.

Nevertheless, Australian trade data will likely impact the AUD/USD more. Australia has a trade-to-GDP ratio of over 50%, with 20% of the workforce in trade-related jobs.

Economists forecast the Australian trade surplus to widen from A$7.280 billion to A$7.300 billion in March. Improving trade terms could influence consumer confidence and drive buyer demand for the Aussie dollar. Beyond the headline figure, investors must also consider import and export trends.

US Economic Calendar: Nonfarm Productivity and Unit Labor Costs

Later in the Thursday session, the US labor market data will warrant investor attention. Following the Q1 employment cost numbers, a surge in unit labor costs could lead to increased demand for the US dollar.

Economists forecast unit labor costs to jump by 3.3% quarter-on-quarter in Q1 2024 after rising by 0.4% in Q4 2023. Moreover, economists expect nonfarm productivity to advance by 0.8% in Q1 2024 after increasing by 3.2% in Q4 2023.

Higher unit labor costs could signal increased inflationary pressures and decrease investor expectations for a September Fed rate cut. Firms pass on labor costs to consumers in a high-demand environment.

Other stats include the weekly jobless claims figures, factory orders, and trade data. Barring an unexpected surge in US initial jobless claims, the numbers will unlikely influence the Fed rate path. Economists forecast initial jobless claims to increase from 207k to 212k in the week ending April 27.

Short-Term Forecast

Near-term AUD/USD trends will hinge on the trade data from Australia and US labor market data. Improving Australian trade terms could tilt monetary policy divergence toward the Aussie dollar. Recent US inflation numbers could delay the timing of a Fed rate cut. In contrast, inflation numbers from Australia and improving trade terms may fuel speculation about an RBA rate hike.

AUD/USD Price Action

Daily Chart

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

An Aussie dollar move to the $0.65500 handle could give the bulls a run at the 200-day EMA and the $0.65760 resistance level.

Investors should consider both Aussie trade data and US labor market indicators.

Conversely, an AUD/USD break below the 50-day EMA could signal a potential fall to the $0.64582 support level.

With a 14-period Daily RSI reading of 52.38, the AUD/USD may break above the $0.65760 resistance level before entering overbought territory.