During Thursday’s European trading session, the Australian dollar (AUD) gives up most of its early gains and flattens to about 0.7045 versus the US dollar (USD). Following the release of the Australian labor market data for January, the Aussie pair saw strong bids earlier in the day.
With a lower unemployment rate and modest new hires, the data indicated mixed job conditions. Despite projections of 4.2%, the unemployment rate remained stable at 4.1%. The Australian economy generated 17.8K new jobs, which was less than the 20K forecast and the previous reading of 68.5K, which was revised up from 65.2K.
After stable job market conditions, hawkish Reserve Bank of Australia (RBA) speculation is anticipated to hold firm. A 25 basis point (bps) increase in the Official Cash Rate (OCR) to 4.1% by the August meeting has been fully priced in by traders, according to a Reuters report.
Citing upside inflation risks, the RBA maintained the possibility of additional monetary tightening during its policy meeting earlier this month, raising its OCR by 25 basis points to 3.855.
The Federal Open Market Committee’s (FOMC) January policy meeting minutes revealed on Wednesday that officials are not in a rush to lower interest rates because price pressures have been consistently above the central bank’s 2% target, which has caused the US dollar (USD) to trade generally firm.
The US Dollar Index (DXY), which measures the value of the US dollar relative to six other major currencies, maintains its gains throughout the day close to a new weekly high of 97.80 that was recorded on Wednesday.
The renewed threats of US military action in Iran have increased the US dollar’s appeal as a safe haven on a global scale.
