Australian dollar higher as job growth surges

The Australian dollar is up for a second straight day on Friday. In the European session, AUD/USD is trading at 0.6712, up 0.24%. The Aussie is having a miserable October, having lost 2.9%.

Australian employment change soars

Australian job growth sparkled in September with a gain of 64.1 thousand. This was higher than the revised 42.6 thousand in August and crushed the market estimate of 25,000. The report was especially impressive as full-time employment jumped by 51.6 thousand, rebounding from -5.9 thousand in August.

The labor market remains resilient, despite the sputtering economy which has been choked by high interest rates. The Reserve Bank of Australia is yet to join the rate-cutting cycle embraced by most major central banks, with the key rate at 4.35%.

The central bank has maintained rates for almost a year and isn’t expected to start trimming until early 2025. With the labor market still tight, the RBA can afford to prolong its “higher for longer” rate stance. The RBA makes its next rate decision on November 5 and is widely expected to stay on the sidelines.

US retail sales jump

US retail sales rose 0.4% in September, above the 0.1% gain in August and beating the market estimate of 0.3%. A key driver of the strong gain was the sharp drop in gasoline prices. Annually, retail sales eased to 1.7%, below the revised 2.2% gain in August but above the forecast of 1.6%.

The positive retail sales data is a sign that the US economy posted solid growth in the third quarter. This supports the case for the Fed to deliver quarter-point rate cuts in both November and December. The Federal Reserve chopped rates by an oversized half-point in September but that hefty cut is expected to be a one-time move, barring a sudden deterioration in economic data.

AUD/USD Technical

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