Australian Dollar Slides as RBA Might Cut Rates, Watch AUDUSD
The Australian Dollar, AUDUSD, is down sharply today, and at the time of writing the pair was down by 0.92%. The ongoing tensions in the middle east, but also worries about the economic outlook for Australia following Australia’s wildfire crisis is weighing heavy on the price. The ANZ Job Advertisement index for Australia, a leading indicator for Australian employment, is also affecting sentiment as the index showed that job ads declined by 6.7% in December, which is a sharp drop in the index. We need to go back to June last year to find a similarly negative figure, and before that, the last time the job market was this weak was in 2013-2014. The trend in the unemployment rate was already negative, and something the RBA was anticipating. But it looks like wildfires are further adding to the gloomy outlook for the Australian labour market.
The rates markets are now giving it a 57% probability of a rate cut at the next RBA rate meeting in February.
The AUDUSD has given up approximately 78.60% of the rally from the December 18 low, which suggests that the downside is limited given the overall uptrend from the October low of 0.6670. Also, the risk-reward ratio favours the upside given that the price is closer to the trend defining level at 0.6836. If the price indeed remains above the 0.6836 low, the price might be able to revisit the 0.7032 level in the next few weeks. However, if the AUDUSD slides below the December 18 low at 0.6836, then the uptrend would end and the price might slide to the December ten low of 0.68.