**AUD/USD Slides as Dovish RBA Bets Trump Weak NFP: Aussie Faces Pressure**
*Based on original reporting by FXStreet and additional analysis.*
The Australian dollar (AUD) experienced a decline against the US dollar (USD), despite the release of softer-than-expected U.S. Non-Farm Payrolls (NFP) data. This movement suggests that domestic monetary policy expectations are overshadowing global dollar trends for the Aussie dollar. Investors and traders are closely watching signals from the Reserve Bank of Australia (RBA), where rising expectations of an eventual rate cut are weighing on the currency. In this detailed article, we explore the interplay of economic data from both countries, monetary policy outlooks, and the resulting impact on the AUD/USD currency pair.
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### US Non-Farm Payrolls Miss Expectations
The US Dollar Index (DXY), which tracks the greenback against a basket of major currencies, generally reacts strongly to key labor market indicators. On Friday, the latest NFP headline number came in softer than forecast:
– **NFP Data (June 2024):**
– Actual jobs added: 206,000 (Consensus: 190,000)
– Previous month (revised): 218,000 (down from 272,000)
– **Unemployment Rate:** Rose slightly to 4.1 percent, up from 4.0 percent
– **Wage Growth:** Average hourly earnings increased by 0.3 percent month-over-month, in line with expectations, but showed signs of cooling on an annual basis
Although the data was mixed, overall, it signaled a labor market that is beginning to show minor cracks. This has fueled market speculation that the Federal Reserve may be compelled to cut interest rates sooner than previously anticipated, adding downward pressure to the US dollar. Historically, a soft jobs report weakens the dollar since it suggests a dovish turn in monetary policy.
– **Federal Reserve Interest Rate Expectations:**
– Markets are now pricing in a higher likelihood of up to two rate cuts for 2024, starting as early as September
– Bond yields, especially the 2-year and 10-year Treasuries, dipped on the news, reflecting lower rate expectations
Despite the soft NFP report, the reaction in FX markets was somewhat muted, with the USD initially slipping but quickly regaining composure due to continued global risk aversion and the unique situation facing the Aussie dollar.
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### RBA Rate Cut Bets Intensify
The Reserve Bank of Australia has kept its overnight cash rate unchanged at 4.35 percent since November 2023. However, a growing chorus of economists and analysts believe the RBA could soon shift policy in response to local economic weakness.
– **Reasons for RBA Dovishness:**
– **Weak Australian Growth:** Recent GDP data revealed tepid growth, with annual GDP rising just 1.1 percent in the first quarter of 2024
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