Australian Dollar hangs near August 7 low after weak jobs data, ahead of Trump-Xi summit

• AUD/USD sticks to modest losses as the AUD remains depressed after the unimpressive jobs data.
• Fed rate hike bets remain supportive of elevated US bond yields and continue to support the USD.
• Traders, however, seem hesitant to place aggressive bets ahead of the crucial Trump-Xi meeting.

The AUD/USD pair hits a fresh low since August 7, around the 0.7025 region, following the release of Australian monthly jobs data, though it lacks follow-through selling and defends the 200-day Simple Moving Average (SMA) pivotal support.

The Australian Bureau of Statistics (ABS) reported that the number of employed people rose by 39K in August, compared to 20K expected and a decline of 15.8 K recorded in the previous month. The positive headline reading, however, was offset by a fall in full-time jobs and a rise in the Unemployment Rate to 4.6%, from 4.5% in July. This comes on top of the disappointment from Australia's flash PMIs, which showed a slowdown in services activity and a contraction in the manufacturing sector. The softer data tempers expectations of a follow-through move by the Reserve Bank of Australia (RBA) after the expected 25 basis points (bps) rate hike next week and undermines the Australian Dollar (AUD).

The US Dollar (USD), on the other hand, retains its strong bullish undertone amid rising bets for another interest rate hike by the Federal Reserve (Fed). In fact, traders are now assigning a higher probability that the US central bank will raise borrowing costs again in October. The bets were lifted by the S&P Global report, which showed that US business activity accelerated for a fourth straight month in September and registered the fastest pace of growth since July 2021. This keeps US bond yields close to multi-year highs and acts as a tailwind for the Greenback, weighing on the AUD/USD pair. Bears, however, opt to wait for a meeting between US President Donald Trump and his Chinese counterpart Xi Jinping.

AUD/USD daily chart

Technical Analysis

The AUD/USD pair holds just above the 200-day SMA at 0.7022 and the 61.8% Fibonacci retracement at 0.7006, reinforcing a nascent demand zone around 0.70 and hinting that dips toward this area are likely to attract buyers.

On the topside, initial resistance is seen at the 50.0% retracement at 0.7050, followed higher by the 38.2% level at 0.7094 and then the 23.6% retracement at 0.7149, where upside momentum could slow.

(The technical analysis of this story was written with the help of an AI tool. Know more.)