*Credit: Adapted and expanded from original reporting by Anil Panchal, FXStreet*
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**AUD/USD Surges to Six-Week High: Weak US Jobs Data Bolsters Fed Rate Cut Expectations**
The AUD/USD currency pair recently surged to its highest levels in six weeks following the release of the latest US Nonfarm Payrolls (NFP) report. The weaker-than-anticipated labor data has reinforced market expectations that the US Federal Reserve will soon begin lowering interest rates. This movement in the foreign exchange market underscores the complex interplay between economic indicators, central bank policies, and global sentiment.
This in-depth article dissects the latest AUD/USD rally, examines the context and implications of the weak NFP data, and explores future scenarios for both the Australian Dollar and the US Dollar.
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## Key Headlines
– The AUD/USD pair advanced sharply to its strongest since late July, driven by broad US Dollar weakness.
– The latest US Nonfarm Payrolls report disappointed forecasts, further cementing the likelihood of a more dovish Federal Reserve stance.
– Australia’s stable economic outlook and robust terms of trade provide additional tailwinds to the Australian Dollar.
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## US Nonfarm Payrolls: Key Driver for Markets
The most recent US labor market report revealed several important details that influenced currency traders:
– **Nonfarm Payrolls** increased by 187,000 in August, below the consensus forecast of 170,000 but still reflecting a moderate pace of hiring.
– The **unemployment rate** edged up to 3.8 percent, surpassing both the previous reading and analysts’ projections.
– **Average hourly earnings** rose by just 0.2 percent month-on-month, similarly missing market expectations.
### Implications for the Federal Reserve
In light of these report details:
– Markets now see an **increased probability that the Federal Reserve will cut interest rates sooner rather than later**.
– The softening in both the pace of job growth and wage increases relieves some inflationary pressure and gives policymakers more scope to pivot toward an easing stance.
According to CME’s FedWatch Tool, traders are now pricing in a greater than 60 percent probability that the Fed will deliver its first rate cut as soon as the December 2024 meeting. Previously, many expected the central bank to keep rates elevated for a more extended period.
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## AUD/USD Technical Analysis: Bullish Momentum
The AUD/USD pair’s technical posture has shown marked improvement following these macroeconomic signals.
– The pair climbed toward the 0.6550 area, a level last seen in late July.
– Key technical indicators point to further upside potential:
– The 50-day and 200-day moving averages have begun to converge, suggesting the possibility of a sustained bullish trend.
– Relative Strength Index (RSI) remains below overbought territory, allowing additional room for appreciation.
– Immediate resistance lies near 0.6575, while support is seen at 0.6475 and 0.
Read more on AUD/USD trading.