AUD/USD recovers some weak Aussie labor data-driven losses, US jobless claims eyed

• AUD/USD recovers some of its early losses, which were driven by weak Australian employment data.
• The Australian laborforce was surprisingly reduced by 5.4K in August.
• The Fed reduces its key borrowing rates by 25 bps to 4.00%-4.25%.

The AUD/USD pair claws back some of its early losses and rebounds to near 0.6650 during the European trading session on Thursday. The Aussie pair fell sharply, earlier in the day, to near 0.6615 after the Australian Bureau of Statistics showed that employment unexpectedly fell in August.

The labor market report showed that the overall labor force was trimmed by 5.4K, while it was expected to show an addition of 22K fresh workers. The report also showed that full-time jobs declined by 40.9K. Meanwhile, the Unemployment Rate held steady at 4.2%, as expected.

Signs of softening job demand are expected to force traders to reassess bets for the Reserve Bank of Australia’s (RBA) monetary policy outlook. Meanwhile, the RBA is expected to hold its Official Cash Rate (OCR) steady at 3.6% in the policy meeting later this month.

Meanwhile, the US Dollar (USD) strives to hold the recovery move seen after the monetary policy announcement by the Federal Reserve (Fed) on Wednesday. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, holds onto Wednesday’s recovery move around 97.00 during the press time.

In the monetary policy, the Fed reduced interest rates by 25 basis points (bps) to 4.00%-4.25%, citing downside employment risks, and signaled two more rate cuts this year.

In Thursday’s session, investors will focus on the United States (US) Initial Jobless Claims data for the week ending September 12, which will be published at 12:30 GMT. The number of individuals filing for jobless benefits for the first time is expected to come in lower at 240K against the prior release of 263K, which was the highest reading seen in four years.