Largest AU Jobs Growth in a Decade Pushes AUD/USD Exchange Rate Higher
The Australian Dollar to US Dollar exchange rate (AUD/USD) has seen a moderate rise today, following the release of strongly supportive jobs figures in January.
The ANZ jobs stats have shown a 6.2% increase in new jobs advertised at the start of 2018, which is the largest monthly rise since February 2010.
This data also cancels out the negative effects of the November to December 2017 reading, which showed a -2.7% decline.
ANZ Head of Australian Economics David Plank responded positively to the news, saying;
‘It is encouraging to see a strong recovery in job ads last month after a slight retreat in December.
The bounce in January is in line with ongoing strength in business conditions, capacity utilisation and other surveys of employment conditions’.
Warnings of Limited RBA Activity Keep AUD/USD Advance Limited
While the Australian Dollar has appreciated against the US Dollar today, economic forecasts have prevented an outright AUD/USD rally.
These have concerned the Reserve Bank of Australia (RBA), Australia’s central bank. Tom Kennedy, JPMorgan Chase and Company economist has warned that;
‘Strong global growth and the long-awaited recovery in global inflation have increased the risk that central banks turn more hawkish.
[However], the Australian economy is facing a different set of challenges and our expectation is for the RBA to leave the cash rate unchanged at 1.5% across the forecast horizon’.
This cautious forecast comes ahead of a high-impact RBA monetary policy meeting, so has kept the AUD/USD exchange rate in check.
US Dollar to Australian Dollar Exchange Rate Slides ahead of PMI Data Release
The US Dollar has been in low demand today, falling against both the Australian Dollar and the New Zealand Dollar.
This poor performance has been caused by trader uncertainty, ahead of the release of a spread of US PMI activity readings.
These will be looking at overall economic activity in January, along with activity excluding manufacturing data.
Growing PMI readings could boost the chances of four Federal Reserve interest rate hikes this year, which is still an uncertainty at present.
AUD/USD Exchange Rate Forecast: RBA Policy Meeting could Trigger Australian Dollar Volatility
The Australian Dollar could turn turbulent in the near-term, when the RBA holds its monetary policy meeting for February.
This will be the first meeting of 2018 for the Australian central bank, but based on forecasts, the RBA isn’t likely to adjust interest rates.
Instead, it will be worth looking for changes to the RBA’s economic outlook, specifically with regard to inflation and wage growth over 2018.
If RBA policymakers believe that inflation and average earnings could both pick up over the year, the Australian Dollar could rise in value.
Increased inflation and greater financial security for Australian households will raise the odds of an RBA interest rate hike in 2018, which would be the first since 2010.
As mentioned above, the US Dollar could be shifted by upcoming PMI activity readings.
A rise in the high-impact non-manufacturing reading could trigger substantial USD/AUD exchange rate gains.