Australian Dollar rises on upbeat labor market data

• Australian Dollar gains on improved labor market data released on Thursday.

• Australia’s unemployment rate declined to 4.3% in October from 4.5% in September, beating market expectations of 4.4%.

• The US Dollar extends its gains on the growing hopes of ending the government shutdown.

The Australian Dollar (AUD) gains ground against the US Dollar (USD) on Thursday, extending its gains for the second consecutive day. The AUD/USD pair appreciates as the AUD receives support following the release of improved employment data from Australia.

The Australian Bureau of Statistics (ABS) released the Unemployment Rate on Thursday, which declined to 4.3 % in October from 4.5% in September, against the market expectations of 4.4%. Meanwhile, the Employment Change arrived at 42.2K in the same month from 12.8K (revised from 14.9K) prior, sharply exceeding the market forecast of 20K.

Australia’s Full-Time Employment rose by 55.3K in October, from a rise of 6.5K in the previous reading (revised from 8.7K). Participation Rate steadies at 67%, while the Part-Time Employment decreased by 13.1K in October versus an increase of 6.3K prior.

The AUD gained support from cautious sentiment surrounding the Reserve Bank of Australia (RBA) policy outlook. RBA Deputy Governor Andrew Hauser said on Wednesday, “Our best estimate is that monetary policy remains restrictive, though the committee continues to debate this.” Hauser added that if the policy is no longer mildly restrictive, it would have significant implications for future decisions.

US Dollar gains on hopes of government shutdown nearing end

• The US Dollar Index (DXY), which measures the value of the US Dollar against six major currencies, is extending its gains for the second successive session and trading around 99.60 at the time of writing. The Greenback advances due to growing optimism that the prolonged US government shutdown could be resolved this week.

• The House of Representatives voted 222 to 209 to approve a funding package and end the longest government shutdown in US history on Wednesday. The approval of the Bill by the House would clear it for US President Donald Trump’s signature. Earlier this week, Trump already backed the bipartisan deal to end the US government shutdown.

• President Trump issued a premonition that inflation will reach 1.5% "pretty soon", a level of inflation that has evaded the US economy for nearly four years after shooting above that level in February of 2021. 1.5% inflation is also well below the long-run average for US inflation over ten years.

• White House Press Secretary Karoline Leavitt said on Wednesday that October jobs and inflation data reports are unlikely to be released as a consequence of the government shutdown.

• Automatic Data Processing (ADP) released the US Employment Change on Tuesday, showing an average weekly job loss of 11,250 in the four weeks to October 25. Weaker-than-expected private US labor data increased the likelihood of the Federal Reserve (Fed) policy easing.

• China's Ministry of Commerce said on Monday that it would temporarily lift its ban on approving exports of “dual-use items” related to gallium, germanium, antimony, and super-hard materials to the US. The suspension takes effect from Sunday until November 27, 2026. Any change in the Chinese economy could impact the AUD as China is a major trading partner for Australia.

• National Bureau of Statistics of China reported on Sunday that the Consumer Price Index (CPI) climbed 0.2% year-over-year in October, recovering after a decline of 0.3% in September. The market consensus was for 0% in the reported period. CPI inflation increased 0.2% MoM in October, against 0.1% prior. Producer Price Index (PPI) dropped 2.1% YoY in October, following a 2.3% fall in September. The data came in above the market consensus of -2.2%.

• University of Melbourne released on Tuesday that Australia’s Westpac Consumer Confidence jumped 12.8% in November to 103.8, surpassing 100 for the first time since February 2022. The rebound follows a 3.5% decline in October and marks the strongest non-pandemic reading in seven years, driven by improving economic conditions and easing external risks.

Australian Dollar eyes rectangle’s upper boundary

The AUD/USD pair is trading around 0.6560 on Thursday. On the daily chart, the pair appears to be consolidating within a rectangular range, reflecting sideways movement. Nonetheless, it remains above the nine-day Exponential Moving Average (EMA), suggesting firm short-term bullish momentum.

The AUD/USD pair could target the rectangle’s upper boundary around 0.6630. A break above the rectangle would cause the emergence of the bullish bias and support the pair to test the 13-month high of 0.6707, recorded on September 17.

On the downside, the immediate support lies at the 50-day EMA of 0.6537, followed by the nine-day EMA at 0.6531. A break below these levels would weaken the medium- and short-term price momentum and prompt the AUD/USD pair to test the lower boundary of the rectangle around 0.6470, followed by the five-month low of 0.6414, which was recorded on August 21.