The Australian dollar weakened against the US dollar on Wednesday, reaching 0.6215 amid strong US labor market data and renewed tariff threats from President-elect Donald Trump. While Australian inflation data showed a slight increase, it failed to counter the impact of the positive US economic indicators and cautious market sentiment following the release of the FOMC December meeting minutes.
The AUD/USD declined to 0.6215 on Wednesday as renewed tariff threats from President-elect Donald Trump and strong US labor market data supported the US Dollar. Australian inflation data, while slightly better than expected, failed to lift the Aussie as traders stay cautious after of the release of the Federal Open Market Committee ( FOMC ) December meeting minutes. US labor market data, FOMC minutes, and local inflation data all contributed to the Aussie's weakened position.
The US Department of Labor reported that Initial Jobless Claims for the week ending January 4 dropped to 201,000, better than the market expectation of 218,000 and down from the prior week’s 211,000. Private sector employment also showed resilience, with 122,000 jobs added in December, according to ADP data, although this came below the expected 140,000. Despite slower job growth, ADP Chief Economist Nela Richardson noted that healthcare created more jobs than any other sector in the second half of the year. The insured unemployment rate remained low at 1.2%, further emphasizing the labor market’s strength. On the Australian side, inflation figures showed a slight uptick, with the Weighted CPI for November rising by 2.3% YoY, surpassing October’s 2.2%. However, the Trimmed Mean CPI eased to 3.2% from 3.5%, tempering expectations for a more hawkish RBA response. The dovish tone from the Reserve Bank of Australia, coupled with stronger US economic data, kept the AUD under pressure. The FOMC minutes revealed cautious optimism among Federal Reserve officials. They highlighted solid GDP growth and low unemployment but noted that the disinflation trend had stalled in recent months. Policymakers emphasized the need for a gradual approach toward a neutral monetary policy stance and flagged risks from potential trade and immigration policy changes under the incoming administration. The AUD/USD faced renewed selling pressure, declining to 0.6215 on Wednesda
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