AUD/USD jumps to near 0.6580 on strong Aussie labor market data
The AUD/USD pair climbs to near 0.6580 during the European trading session on Thursday, the highest level seen in almost two weeks. The Aussie pair strengthens as the Australian Dollar (AUD) outperforms its peers, following the release of the strong Australian employment numbers for October.
  • AUD/USD refreshes almost two-week high near 0.6580, following upbeat Australian employment data.
  • In October, Australian employers added a fresh 42.2K jobs, beating estimates of 20K.
  • The Fed is expected to cut interest rates again this year.

The AUD/USD pair climbs to near 0.6580 during the European trading session on Thursday, the highest level seen in almost two weeks. The Aussie pair strengthens as the Australian Dollar (AUD) outperforms its peers, following the release of the strong Australian employment numbers for October.

Australian Dollar Price Today

The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies today. Australian Dollar was the strongest against the US Dollar.

USD EUR GBP JPY CAD AUD NZD CHF
USD -0.21% -0.19% -0.02% -0.05% -0.38% -0.08% -0.27%
EUR 0.21% 0.02% 0.18% 0.15% -0.17% 0.12% -0.06%
GBP 0.19% -0.02% 0.18% 0.13% -0.17% 0.11% -0.08%
JPY 0.02% -0.18% -0.18% -0.07% -0.38% -0.11% -0.27%
CAD 0.05% -0.15% -0.13% 0.07% -0.32% -0.02% -0.21%
AUD 0.38% 0.17% 0.17% 0.38% 0.32% 0.29% 0.13%
NZD 0.08% -0.12% -0.11% 0.11% 0.02% -0.29% -0.19%
CHF 0.27% 0.06% 0.08% 0.27% 0.21% -0.13% 0.19%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Australian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent AUD (base)/USD (quote).

Earlier in the day, the Australian Bureau of Statistics reported that employers hired a fresh 42.2K jobs, beating estimates of 20K and the prior reading of 12.8K. The Unemployment Rate decelerated to 4.3%, larger than expectations of 4.4% and the previous release of 4.5%.

Strengthening Australian labour market conditions are expected to be a drag on market expectations for more interest rate cuts by the Reserve Bank of Australia (RBA). So far this year, the RBA has reduced its Official Cash Rate (OCR) by 75 basis points (bps) to 3.6%.

Meanwhile, the US Dollar (USD) trades lower amid growing expectations that the Federal Reserve (Fed) will cut interest rates again this year.

During the press time, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades lower to near 99.30, the lowest low seen in almost two weeks.

According to the CME FedWatch tool, the probability of the Fed cutting interest rates by 25 basis points (bps) to 3.50%-3.75% in the December meeting is 67%. This will be the third interest rate cut by the Fed in a row.

 

US Dollar FAQs

The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.

The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.

In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.

Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.


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