I spotted this from Standard Chartered, from late last week after the Australian jobs report (a soft one).
- Data released for September showed the Australian unemployment rate unexpectedly climbed to 4.5%, a noticeable jump from the 4.3% recorded in August
- This softening in the historically tight labour market is being interpreted by traders as a key signal that the economy is cooling, giving the RBA the green light to pivot towards monetary easing.
Stan Chart say that the Australian dollar will face renewed selling pressure. AUD/USD slid after the disappointing labour market report intensified speculation that the Reserve Bank of Australia (RBA) will be forced to cut interest rates next month.
According to the note from Standard Chartered:
- money markets have sharply repriced the outlook for the RBA's upcoming meeting on 4 November
- traders now pricing in a significantly higher probability of a 25-basis-point cut to the official cash rate
- the prospect of a widening interest rate differential, with the RBA easing policy while other central banks potentially hold firm, is weighing on the currency
From a technical standpoint, the bank's analysts warn that the AUD/USD pair appears poised for further downside. They have identified the next critical support level at 0.6420, which coincides with the currency's 200-day moving average. A decisive break below this key long-term trend indicator would be seen as a significantly bearish signal, potentially opening the door for a deeper sell-off.
