Mar 16, 2023 14:12
As a consequence of the upbeat Employment data from the Australian Bureau of Statistics, the AUD/USD pair has extended its recovery to near 0.6640. The Australian economy added 64,600 new employment in February, exceeding the consensus estimate of 48,500. The Australian economy reported 11.5K unemployment in January. From estimates of 3.6% and the previous issuance of 3.7%, the unemployment rate has been further reduced to 3.5%.
The Reserve Bank of Australia (RBA), which is drafting a plan to reduce inflation, will encounter additional challenges as a consequence of positive Australian labor market data. As a larger labor force in action would exacerbate inflationary pressures, RBA Governor Philip Lowe may continue to target higher rates.
Earlier, Australian Consumer Inflation Expectations (Mar) data indicated that inflation projections for the next 12 months decreased to 5.0% from the consensus of 5.4% and the previous release of 5.1%.
In the meantime, S&P500 futures are showing modest gains during the Asian session, which could be considered a dead cat bounce following the volatility on Wednesday. The debacle of Credit Suisse following the failure of Silicon Valley Bank (SVB) has increased the risk of global banking turmoil. According to one school of thought, the Federal Reserve (Fed) and other western central banks' rapid and precipitous interest rate increases contributed to the collapse of the global banking system.
As investors anticipate a less hawkish interest rate decision from the Federal Reserve (Fed) next week, the US Dollar Index (DXY) is looking to extend its correction below 104.60. After a fleeting upswing in January, the United States' inflation has retreated, dampening expectations for a hawkish stance from Fed chair Jerome Powell.