AUD/USD creeps down towards the 0.6900 mark, in a mixed mood

AUD/USD is recording minimal losses of almost 0.20% due to a fragile market mood.
Upbeat US jobs data, added to industrial production and retail sales, gives enough ammunition for another Fed rate hike in September.
Australia’s employment report was softer than estimated, though the unemployment rate fell to 3.4%.

The AUD/USD trims some Wednesday losses, registering modest losses after bouncing off the 50-day EMA during the European session. Factors like Fed speakers pushing against markets expecting Fed rate cuts in 2023, alongside broad US dollar strength, keep investors’ sentiment mixed. At the time of writing, the AUD/USD is trading at 0.6917, below its opening price, after hitting a daily high at 0.6969.

AUD/USD slides on mixed data, hawkish Fed speaking

Before Wall Street opened, the US Department of Labor revealed that unemployment claims for the week ending on August 13 increased by 250K, less than the 265K estimated, while also previously week’s data was downwardly revised. That said, US economic data revealed in the week, led by industrial production, solid retail sales, and a strong labor market, would further cement the case for additional tightening by the Federal Reserve.

In the meantime, the US housing market continues deteriorating. Existing Home Sales for July dropped 5.9%, at a rate of 4.8 million units in July, the lowest level since May 2020, when sales hit their lowest point during the Covid-19 lockdowns.

Elsewhere, San Francisco Fed’s Mary Daly pushing back against a “dovish” tilt by the Fed, perceived by market participants on the release of the FOMC minutes on Wednesday, turned sentiment sour. The greenback is staying a comeback, with the US Dollar Index up 0.63%, above the 107.00 thresholds.

In the Asian session, a softer than expected Australian job report slightly weighed on the AUD/USD. The Australia Bureau of Statistics reported that the unemployment rate dropped to 3.4% from 3.5% estimates. Still, Full Employment Change slashed 40K jobs from the economy, less than a 25K increase estimated by the street.

The AUD/USD ticked lower towards 0.6927, but money market futures still price in further rate hikes by the Reserve Bank of Australia (RBA).

Further data revealed during the week showed that wage prices rose more modestly than estimated, which sent Australia’s bond yields down, dragging the AUD/USD from above the 0.7000 figure to 0.6910.

Therefore, the AUD/USD would likely remain neutral-to-downward biased due to a more aggressive than expected Federal Reserve.