The AUD/USD received a double dose of good news over the last few days which has sent it soaring against the US dollar but some are doubtful that the rally will last.
The jobless numbers released yesterday from Australia showed the unemployment rate falling to an 8-year low which may have been a positive figure but the number of full time jobs slumped compared to last time around and many see this fall in the. Jobless rate as temporary and it will soon rise again.
Even so the news was enough to probably convince the Reserve Bank of Australia to keep rates on hold for the time being which was behind the rally in the Aussie dollar.
“The fall in the unemployment rate to an eight-year low in February suggests that the RBA will remain its optimistic stance for now, but we still think that the labour market will soon start to slacken again." Said Marcel Thieliant, economist at Capital Economics
“The upshot is that the unemployment rate should soon start to rise again, forcing the Reserve Bank of Australia to cut interest rates,” he said.
The second good round of forex news for the Australian dollar was news from the US Federal Reserve that there will not be any more rate hikes this year which at least for now will keep the interest rate difference between the Aussie dollar and the US dollar the same.
The news from the Fed took the market by surprise as many had been predicting that there would be at least one more rate hike this year and with that now off the table, the US dollar is set to weaken against most currencies over the coming months.
The Fed exceeded markets’ dovish expectations, which took a toll on the greenback,” said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington.
“The Fed did a big about-face on policy. The fact that the Fed threw in the towel on a 2019 rate hike was particularly dovish.” he added.
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