The Australia dollar (AUD) remains under a lot of pressure against the US dollar (USD). As a result it still looks very weak, remaining under the 0.6500 level even after May’s big employment report released. Full-time employment in Australia fell by 38,700 full-time positions – the worst full-time jobs loss since November 2022 and a sharp turnaround from June’s gain of 59,500 jobs. One of the most dramatic turns has been in the employment numbers. Yet, the AUD/USD currency pair was hardly fazed by the jobs report.
By the Asian trading session on Thursday, AUD/USD was holding those losses comfortably below 0.6500 — a sign of the ongoing, underlying weakness. Those decisions analysts agree have made the US Federal Reserve the biggest influence on the AUD/USD exchange rate. This is particularly so in the wake of the recent Federal Open Market Committee (FOMC) meeting. The USD’s inability to capitalize on its post-FOMC rise to a fresh weekly high has added further pressure on the Australian dollar.
In other words, the FOMC’s decisions strongly affect overall market sentiment and the strength of the dollar. Traders are understandably nervous about such developments. They’re well aware that even a suggestion of impending changes in US monetary policy can trigger panic on the currency markets. The latest run in the AUD/USD pairing is indicative of this greater economic turmoil, especially those factors which are employment and growth related.
Market analysts believe that the Australian dollar’s outlook may be subject to more volatility. First, they’re blaming the external environment, such as changes in global economic conditions and investor risk appetite for more risky assets. With the AUD/USD pair trading just above the 0.6500 level, traders are on guard, looking for potential opportunity while balancing the necessary risk.
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