In a remarkable turn of events, the US economy created 256,000 jobs in December, significantly surpassing the forecasted 160,000. This robust job growth has sent ripples through global currency markets, strengthening the US Dollar while weighing heavily on the Australian Dollar (AUD). The AUD/USD pair plunged below 0.6150 on Friday, marking its lowest point since April 2020. The persistent strength of the US Dollar amid elevated Treasury yields and geopolitical concerns has intensified the pressure on the AUD.
Private hiring was a strong contributor to the US employment surge, with 223,000 new jobs added in December. This buoyant labor market data propelled the US Dollar Index (DXY) close to 110.00, its highest level since November 2022. Market participants reacted by adjusting their expectations for Federal Reserve rate cuts, now projecting only one reduction in 2025.
The Australian Dollar suffered notably as investors speculated on a potential rate cut by the Reserve Bank of Australia (RBA). The AUD/USD exchange rate declined by 0.55% to 0.6165 on Friday, lingering near its multi-year lows. The Relative Strength Index (RSI) for the AUD dipped to 27, entering oversold territory and highlighting the currency's vulnerability amid global economic uncertainties.
Geopolitical risks and concerns over President-elect Donald Trump's tariff policies further supported the US Dollar's ascent. Meanwhile, the US 10-year Treasury yield briefly surged to approximately 4.80%, reflecting investor confidence in the US economy's resilience. The EUR/USD pair remained under bearish pressure, trading below 1.0300 as the Euro struggled to keep pace with the strengthening greenback.
In contrast to the AUD's struggles, on-chain metrics hinted at a potential rally for SUI. The long-to-short ratio for SUI reached its highest level in over a month, suggesting a shift in market sentiment. Additionally, open interest in SUI was on the rise, indicating increased investor activity and interest in this particular asset.
Amidst these developments, market participants continue to navigate an evolving economic landscape. The upbeat US jobs report has shifted expectations around monetary policy, particularly concerning potential rate adjustments by the Federal Reserve. With only one rate cut anticipated in 2025, investors are recalibrating their strategies to account for prolonged monetary tightening.