• The Australian dollar strengthens amid global uncertainty and evidence of a slowing US labor market.
• The Fed’s erratic signals show prudence in relaxing policy while taking GDP and inflation into account.
• Amidst global economic scrutiny, the direction of the Australian dollar is highly dependent on US job data and trade.

After US economic statistics showed the labor market is cooling, the Australian dollar showed strong gains of more than 0.30% against the US dollar on Thursday. Federal Reserve officials agreed to loosen policy at some point, but they sent conflicting signals to the news media. The opening of the Asian session on Friday saw the AUD/USD trading at 0.6582.

Scottish US job statistics lifted the Aussie Dollar.

Risk-sensitive currencies experienced a regression late in Thursday’s session, facing increased geopolitical risks following Israel’s strike on Iran’s embassy in Syria. US Treasury yields experienced consecutive days of declines, and the US dollar remains essentially flat at 104.20.

 

Because more Americans than anticipated claimed unemployment benefits, US employment data was weak. The number of initial jobless claims increased to 221K last week, above expectations and prior figures of 214K and 212K, respectively. According to additional data, the US trade deficit increased in February despite estimates and January’s print being lacking.

Statements made on Thursday by Fed officials

On Thursday, Federal Reserve officials made news with their activity. The first to declare that inflation was too high was Patrick Harker of the Philadelphia Fed. Thomas Barkin of the Richmond Fed followed. While expressing optimism for a soft landing, he added that strict policy would cause the economy to slow down.

In addition, Chicago Fed Austan Goolsbee stated that the risks associated with the Fed’s dual mandate are better balanced, noting that maintaining restrictive policies for an extended period may hurt employment. Neil Kashkari, the Fed’s representative for Minnesota, recently stated that he sees no need to lower rates in the face of a robust economy, abandoning one rate decrease in favor of merely two.

Not to mention, Cleveland Fed Chair Loretta Mester predicted that growth would exceed the trend this year and that the pace at which inflation would decline would be slower than it was the previous year.

US and Australian economic dockets

Australia’s February Balance of Trade is scheduled to be released on the economic calendar. It is anticipated to show a surplus of A$10.4 billion, which is less than the A$11.027 billion reported last month. In the US, traders are anticipating the release of the nonfarm payroll data for March, which is predicted to reveal that the economy gained over 200K jobs to its already robust total. The forecast is for the unemployment rate to remain unchanged at 3.9% YoY, with an increase in average hourly wages in monthly statistics but a small decline in the twelve months leading up to March.