Australian dollar posts weekly losses as RBA hawkish stance to limit declines

The AUD/USD pair fell significantly on Friday, falling below 0.6700.
Employment data continues to influence possible decisions by the RBA and Federal Reserve.
The decline in the value of the Australian currency is restricted by the aggressive stance of the RBA, which shows no signs of being ready to cut interest rates.

The Australian Dollar (AUD) posted significant losses against the USD in Friday’s session, falling 0.30% to 0.6690. This decline in the AUD/USD exchange rate is mainly due to the strengthening of the US Dollar (USD) amid increased risk aversion. However, higher-than-expected employment data from Australia, indicating a tight labor market, may limit the AUD’s decline, raising concerns about a potential interest rate hike by the Reserve Bank of Australia (RBA), and thus limiting the pair’s decline.

Despite some signs of fragility in the Australian economy, persistently high inflation is prompting the RBA to delay rate cuts, potentially limiting further declines in the AUD. The RBA remains one of the last G10 central banks to begin cutting interest rates, which could strengthen the AUD’s position.

Daily Market Update: Australians grapple with jobless data across the markets

On a silent Friday, markets continue to digest Thursday’s mixed Australian jobs data.
A significant escalate in employment changes of 50.2 thousand was announced, significantly exceeding the previous market forecast of 20 thousand and the record result of 39.5 thousand in May.
On the other hand, the unemployment rate rose slightly from 4.0% to 4.1%, which may soften the RBA’s aggressive stance somewhat.
The market currently forecasts a probability of an RBA rate hike in September or November at around 50%.
Meanwhile, according to the CME FedWatch tool, the probability that the Federal Reserve will cut interest rates in September is about 90%.

AUD/USD Technical Analysis: AUD/USD is falling and above the 20-day SMA

After a edged rally in early July, technical indicators such as the Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) have signaled a weakening momentum, suggesting the pair has entered a corrective period. On Friday, the pair relinquished key support at the 20-day Simple Moving Average (SMA) at 0.6700, which should raise some concerns in trades.

The pair looks set to trade in the 0.6650-0.6780 range in the coming sessions as the market adjusts.