The AUD/USD pair rose 0.4% to almost 0.7040 during Friday’s Asian session. The Australian pair shows strength as the Australian dollar (AUD) outperforms all currencies on expectations that the Reserve Bank of Australia (RBA) may soon make another interest rate hike.
Today’s Australian dollar price
The table below shows the current percentage change of the Australian Dollar (AUD) against the major listed currencies. The Australian dollar was strongest against the US dollar.
| USD | EUR | GBP | JPY | BOOR | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.12% | -0.08% | -0.05% | -0.06% | -0.38% | -0.19% | -0.08% | |
| EUR | 0.12% | 0.04% | 0.07% | 0.06% | -0.26% | -0.07% | 0.03% | |
| GBP | 0.08% | -0.04% | 0.04% | 0.02% | -0.30% | -0.11% | -0.01% | |
| JPY | 0.05% | -0.07% | -0.04% | -0.01% | -0.33% | -0.15% | -0.04% | |
| BOOR | 0.06% | -0.06% | -0.02% | 0.00% | -0.33% | -0.14% | -0.02% | |
| AUD | 0.38% | 0.26% | 0.30% | 0.33% | 0.33% | 0.19% | 0.29% | |
| NZD | 0.19% | 0.07% | 0.11% | 0.15% | 0.14% | -0.19% | 0.10% | |
| CHF | 0.08% | -0.03% | 0.00% | 0.04% | 0.02% | -0.29% | -0.10% |
The heat map shows the percentage changes of the major currencies relative to each other. The base currency is selected from the left column and the quote currency from the top row. For example, if you select Australian Dollar from the left column and move along the horizontal line to US Dollar, the percentage change displayed in the box will represent AUD (base)/USD (quote).
At its February policy meeting, the RBA increased its official cash rate (OCR) by 25 basis points (bps) to 3.85%, with Governor Michele Bullock making clear that tighter monetary conditions are needed as risks to inflation tilt to the upside.
Meanwhile, rising oil prices due to the war in the Middle East involving the United States (US), Israel and Iran have raised expectations of an RBA interest rate hike in the near future.
According to a Reuters report, there is a 33% chance that the RBA will have to raise interest rates again to 4.1% at its March 17 policy meeting. The enhance for May has been fully taken into account, with another one at the end of the year.
At press time, the US dollar (USD) was trading calmly, with the US dollar index (DXY) hovering around 99.00 in anticipation of US non-farm payrolls (NFP) data for February, which will be released at 13:30 GMT. Investors will be closely monitoring official U.S. employment data for novel information on the Federal Reserve’s (Fed) monetary policy outlook.
Overall, the US dollar has performed better than other currencies as market sentiment remains risk averse amid conflicts in the Middle East.
Frequently asked questions about non-farm wages
Nonfarm payrolls (NFP) data are part of the U.S. Bureau of Labor Statistics’ monthly employment report. Specifically, the Nonfarm Payrolls component measures the change in the number of people employed in the U.S. over the previous month, excluding the agriculture industry.
Nonfarm payrolls data can influence Federal Reserve decisions, providing a measure of the Fed’s effectiveness in fulfilling its mandate to support full employment and 2% inflation. A relatively high NFP number means more people are employed, earning more and likely spending more. On both sides, a relatively low Nonfarm Payrolls score may mean that people are struggling to find work. The Fed typically raises interest rates to combat high inflation caused by low unemployment and lowers them to encourage a stagnant labor market.
Nonfarm payrolls data generally have a positive correlation with the US dollar. This means that when wage data turns out to be higher than expected, the US dollar tends to rise and vice versa when it is lower. NFPs influence the US dollar due to their impact on inflation, monetary policy expectations and interest rates. A higher NFP usually means that the Federal Reserve will be tighter in its monetary policy, supporting the USD.
The number of non-farm payrolls is generally negatively correlated with the gold price. This means that higher than expected wage numbers will have a depressing effect on the gold price and vice versa. A higher NFP has an overall positive impact on the value of the USD and like most major commodities, gold is priced in US dollars. So if the US dollar appreciates, it takes fewer dollars to buy an ounce of gold. Additionally, higher interest rates (usually helped by higher NFPs) also reduce the attractiveness of gold as an investment compared to staying in cash, where the money will at least earn interest.
Nonfarm payrolls are just one element of a larger jobs report and may be overshadowed by other elements. Sometimes, when NFP reports higher-than-expected results but average weekly earnings are lower than expected, the market has ignored the potentially inflationary impact of the headline result and interpreted the decline in earnings as deflationary. The components of participation rate and average weekly working hours can also influence market reaction, but only in uncommon cases such as the “Great Resignation” or the global financial crisis.
