AUD/USD witnessed some selling on Thursday in reaction to weaker Australian jobs data.
COVID-19 woes and the cautious mood further undermined the perceived riskier aussie.
A subdued USD price action helped limit losses ahead of important US macro releases.
The AUD/USD pair extended its steady intraday descent through the early European session and refreshed daily lows, around 0.7310 region in the last hour.
The pair struggled to capitalize on the previous day’s modest recovery from the 0.7300 mark, or over two-week lows, instead met with some fresh supply near the 0.7345 region on Thursday. The Australian dollar was weighed down by domestic data, which showed that the number of employed people fell more than expected in August.
The Delta variant of coronavirus had forced lockdowns in Australia’s two largest cities and prompted firms to cut staff. This, along with a fall in the participation rate to 65.2% from 66%, overshadowed an unexpected downtick in the unemployment rate to 4.5% during the reported month from 4.6% reported in the previous month.
This comes on the back of Wednesday’s disappointing Chinese macro data and further fueled worries about a global economic slowdown. This, in turn, was seen as a key factor that acted as a headwind for the perceived riskier aussie. That said, a subdued US dollar price action helped limit any deeper losses for the AUD/USD pair.
The softer US CPI report released earlier this week raised uncertainty over the likely timing of the Fed’s tapering plan and kept the USD bulls on the defensive. Investors, however, still believe that the Fed would begin rolling back its massive pandemic-era stimulus later this year, which, so far, has been lending some support to the USD.
Market participants now look forward to the US economic docket, highlighting the release of monthly Retail Sales figures, Philly Fed Manufacturing Index and Weekly Initial Jobless Claims. The data, along with the broader market risk sentiment, will influence the USD and produce some trading opportunities around the AUD/USD pair.