Australian Dollar drops to one-week low on dismal jobs data; weak USD helps limit losses

• AUD/USD weakens following the disappointing release of Australian jobs data on Thursday.
• The USD retreats further from the post-CPI swing high, offering some support to spot prices.
• Traders now look to US PPI for some impetus ahead of Fed Chair Warsh’s speech on Friday.

The AUD/USD pair attracts some selling in reaction to the disappointing Australian jobs data, dropping to a one-week low, below mid-0.6900s, during the Asian session on Thursday. However, a broadly weaker US Dollar (USD) helps limit the downside for the spot prices and warrants some caution before positioning for an extension of Wednesday's retracement slide from the monthly top – levels above the 0.7000 psychological mark.

The Australian Bureau of Statistics (ABS) reported that the number of employed people declined by 39.3K in September, reversing the previous month's rise of 39.5K and missing estimates of a 20K increase by a big margin. Furthermore, the Unemployment Rate edged higher to 4.7% from 4.6% in August, dampening hopes for another rate hike by the Reserve Bank of Australia (RBA). This, in turn, weighs heavily on the Australian Dollar (AUD), though the ongoing USD retracement slide from the April 2025 high acts as a tailwind for the AUD/USD pair.

Wednesday's US Consumer Price Index (CPI) report pointed to broadening inflation pressures, reaffirming bets for further policy tightening by the Federal Reserve (Fed). Traders, however, are still pricing in around a 75% chance that the US central bank will leave rates unchanged at the October policy meeting. The outlook leads to a further decline in US bond yields, prompting some follow-through USD profit-taking slide and offering some support to the AUD/USD pair. However, geopolitical uncertainties could help limit losses for the safe-haven buck.

Furthermore, market participants seem convinced that the US central bank will raise borrowing costs by the end of this year amid inflation risks stemming from volatile energy prices. Hence, the market focus now shifts to the release of the US Producer Price Index (PPI), due later today. Apart from this, Fed Chair Kevin Warsh's speech on Friday will be looked at for more cues about the future policy path, which will play a key role in influencing the near-term USD price dynamics and provide some meaningful impetus to the AUD/USD pair.

AUD/USD 4-hour chart

Technical Analysis

The AUD/USD holds a mildly bearish near-term bias and remains capped beneath the 100-period Simple Moving Average (SMA) on the 4-hour chart. Spot prices also trade just under the previously supportive upward trend line around 0.6960, suggesting that former support has turned into nearby resistance and that rallies may struggle while the pair is contained below these overhead levels.

The 100-period SMA at 0.6986 might continue to act as an initial resistance, which reinforces the broader cap on recovery attempts ahead of the overnight swing high, around the 0.7015 region. On the downside, the next notable support is the structural swing base around 0.6905, where buyers would be expected to re-emerge if the AUD/USD pair extends its pullback.

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