Global Update: US Job Growth and Australia’s Economic Outlook 🇺🇸🇦🇺

US Job Growth Surprises, Market Awaits Non-Farm Payrolls Report 📊

On October 2, the ADP Research Institute and Stanford Digital Economy Lab released data showing that the US added 143,000 jobs in September, surpassing the forecasted 125,000. This result came as a surprise, especially after August’s dismal numbers, which were the lowest since March 2023. However, while the September data shows a rebound, the three-month average of job growth is still just 119,000, marking one of the lowest levels since 2020.

The market is now eagerly awaiting the release of the much-anticipated non-farm payrolls report from the US Labor Department this Friday. Expectations are that it will show an increase of 150,000 jobs in September, with the unemployment rate holding steady at 4.2%. The August non-farm payrolls report had shown a growth of only 142,000, below expectations, while July’s data was revised down sharply, causing disappointment in the market.

As the US labor market cools, concerns about its future performance are growing. Unemployment rates have been rising, the ISM Manufacturing Employment Index remains weak, and other labor market indicators are showing signs of slowing. These developments have made labor market data one of the most closely watched economic reports, as it could signal whether the US economy will experience a soft landing.

Fearing further deterioration in the labor market, the Federal Reserve cut interest rates by 50 basis points in September. Fed Chairman Jerome Powell mentioned this week that the US labor market remains strong but has cooled significantly over the past year. Due to this shift, the US Dollar Index rose for four consecutive days this week, reaching a six-week high of 102, while the Euro fell for five days in a row, marking its longest losing streak in five months. The Japanese Yen weakened against the dollar, dropping 0.5%, hitting its lowest level since August 20 at 147.

Australia’s Economic Data and Aussie Dollar Outlook 💹

Australia’s trade data has been impressive, and the Australian Dollar (AUD) may continue to rise. Australia’s trade surplus is expected to decrease slightly from 6.09 billion AUD to 5.5 billion AUD, with August’s trade surplus coming in at 5.644 billion AUD, which is better than expected. Last Friday, the AUD/USD pair surged to a 20-month high of 0.6937.

Several factors are supporting the Aussie Dollar. First, China’s stimulus measures have driven a significant jump in metal prices, with iron ore seeing a weekly increase of over 10%. Then, the latest US inflation data suggests the Federal Reserve may cut rates further, while the market sees only a 20% chance that the Reserve Bank of Australia (RBA) will ease its policy in its November meeting. The RBA’s stable rate outlook is providing support for the AUD.

On the daily chart, the AUD/USD continues to trade near the upper Bollinger Band, showing strong bullish momentum. Resistance is seen at around 0.6950, and if this level is broken, the pair could target the 0.70 level. Additionally, Australia’s AIG Manufacturing Index improved slightly in September, rising from -23.5 to -18.6, although it still indicates contraction for the 29th consecutive month.

However, heightened geopolitical tensions in the Middle East have led to increased caution in the market, which could limit the AUD’s upside potential. As of Wednesday, the AUD/USD pair was trading around 0.6900. The technical analysis suggests that the price is attempting to consolidate back into an upward channel, indicating that the bullish trend is still in play.