Skip to content
Sydney Opera House

AUD/USD drops before RBA policy & US jobs report


  • AUD/USD bulls take a pause after a two-day advance that has just eased.
  • Despite recession fears and geopolitical concerns, the US dollar fell.
  • Yields were under pressure for the second day in a row.

After a two-day rise, AUD/USD bulls take a breather, recently dropping to 0.6965 as the crucial NFP Friday begins. 

The pair’s latest swings could be linked to a cautious mood ahead of the Reserve Bank of Australia’s (RBA) crucial Monetary Policy Statement (MPS), as well as the July US employment report. Buyers, on the other hand, are optimistic about the general weakness of the US dollar.

The RBA confirmed market forecasts by announcing a 50 basis point (bps) rate increase, the fourth in 2022 while raising the benchmark rate to 1.85 per cent. 

However, the RBA Statement, which stated, “The central bank is not on a predetermined path in normalizing rates,” appears to have enticed AUD/USD bears following the monetary policy decision, which underlines today’s RBA MPS.

Home loan customers should prepare for increased repayment hardship after the Reserve Bank increased interest rates for the fourth time in four months. 

It has been six years since the official interest rate has been this high.

According to some analysts, the RBA is only halfway through its cycle of rate increases, with the intention of achieving or perhaps exceeding 3% by the end of the year.

The big four banks have sharply increased interest rates for current clients with variable-rate loans as the cost of borrowing rises, and additional rate increases are anticipated.

In the United States, however, initial jobless claims increased to 260K for the week ending July 30 from 254K the previous week and 259K projected. 

Furthermore, employment cutbacks have reduced and German factory orders have risen, while the US Goods and Services Trade Balance has improved to $-79.6 billion versus the $-80.1 billion market estimate and $-84.9 billion revised previously. 

Despite the conflicting statistics, market participants remained optimistic about the Fed’s aggressiveness, but this was insufficient to raise the US dollar despite recession fears.

On Thursday, the Bank of England (BOE) openly acknowledged recession and future hardships, while Cleveland Fed President Lorretta Mester stated that recession chances in the United States had increased.

It should be noted that, notwithstanding the verbal war, stronger Australian trade data and the absence of serious incidents during US House Speaker Nancy Pelosi’s Taiwan visit looked to have underpinned the AUD/USD rise the previous day.

In the midst of these actions, Wall Street closed mixed, but yields fell for the second straight day to 2.69 per cent at the latest, putting pressure on the US currency ahead of the critical data.

Looking ahead, AUD/USD traders should wait for the RBA’s MPS for clear direction, as the hawks appear to be tiring. 

Following that, the US Nonfarm Payrolls (NFP) for July, which are predicted to be 250K versus 372K the previous month, will be critical for AUD/USD traders to monitor for clear direction.

Technical Outlook

After the second day of gains, the AUD/USD is trading above the 50-day Simple Moving Average (SMA), improving the currency’s position. 

If prices remain above the 50-day SMA, a retest of the wedge goal at 0.7036 is possible. Another possibility is that the price may revert to the 20-day SMA.

All information has been prepared by TraderFactor or partners. The information does not contain a record of TraderFactor or partner’s prices or an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. Any material provided does not have regard to the specific investment objective and financial situation of any person who may read it. Past performance is not a reliable indicator of future performance.


  • Phyllis Wangui

    Phyllis Wangui is a Financial Analyst and News Editor with qualifications in accounting and economics. She has over 20 years of banking and accounting experience, during which she has gained extensive knowledge of the forex, stock news, stock market, forex analysis, cryptos and foreign exchange industries. Phyllis is an avid commentator on these topics and loves to share her insights with others through financial publications and social media platforms.