**AUD/USD Advances on Robust Australian GDP and Disappointing US Jobs Data**
*Based on content by Daniel Dubrovsky at IG.com and supplemented by recent market data.*
The Australian dollar (AUD) recently saw a notable surge against its US counterpart (USD), buoyed by positive economic developments in Australia and mixed signals from the US labor market. Investors closely watched policy implications for both the Reserve Bank of Australia (RBA) and the US Federal Reserve, leading to significant currency movement.
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## Australian Dollar Gains After Strong GDP Data
The main catalyst behind the recent AUD/USD uptick has been the release of stronger-than-expected Australian gross domestic product (GDP) data. This data alleviated concerns about a potential slowdown in the Australian economy and prompted a shift in trader sentiment.
– **Australian GDP (First Quarter 2024):**
– The Australian economy grew 0.2 percent quarter-on-quarter, surpassing most forecasts, which anticipated slower expansion.
– Year-on-year, GDP increased by 1.1 percent, reinforcing confidence in Australia’s relative economic resilience.
– Factors supporting this growth included robust exports, ongoing public infrastructure investment, and an uptick in services consumption.
– The data reduced immediate fears of recession in Australia, especially amid global economic headwinds.
– **Market Reaction and RBA Outlook:**
– After the GDP announcement, traders pared back expectations of imminent rate cuts by the RBA.
– The RBA’s next meeting remains highly anticipated, but the strong GDP print suggests that the central bank could remain cautious about easing monetary policy.
– Some analysts flagged persistent inflationary concerns, especially in services, which might force the RBA to keep rates elevated longer than previously thought.
– Market-implied probabilities from ASX 30-day interbank cash rate futures show a marked decrease in expectations of a rate cut in the next quarter.
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## Weak US Jobs Data Weighs on The Dollar
While the Australian dollar gained support domestically, its move was amplified by softening US jobs data, which placed downward pressure on the dollar globally.
– **Nonfarm Payrolls Disappoint:**
– The latest US nonfarm payrolls report showed the American economy added fewer jobs than anticipated.
– Job gains totaled 175,000 in May, missing the consensus estimate of around 185,000 to 200,000.
– The unemployment rate climbed slightly to 3.9 percent, compared to the expected steady 3.8 percent.
– Alongside the jobs miss, wage growth slowed, with average hourly earnings rising by just 0.2 percent month-over-month, compared to the prior month’s 0.3 percent.
– **Dovish Federal Reserve Bets Intensify:**
– Markets interpreted the jobs data as a signal that labor market momentum may be waning.
– Traders increased bets on possible interest rate cuts by the Fed later in 2024.
– Fed
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