AUD/USD rises amid mixed US employment data and lower US yields

• The Australian dollar rises and marks its third consecutive day of gains.
• US Nonfarm Payrolls beat expectations by 275,000, but rising unemployment and slower wage growth point to a cooling labor market.
• The rise in AUD/USD was supported by the decline in US 10-year Treasury yields and the weakening of the Dollar Index, amid recalibration of global monetary policy.

He Australian dollar It advanced for the third consecutive day, early in the North American session, with a rise of 0.35% and was trading at 0.6654.

Australian Dollar Strengthens as US Dollar Extends Weekly Losses

Newly released data from the US Department of Labor revealed that US Nonfarm Payrolls for February beat estimates of 200,000, stood at 275,000, and was higher than the downwardly revised January reading from 353,000 to 229,000. Other data underlined that the labor market is cooling, as the unemployment rate rose from 3.7% to 3.9%, while average hourly earnings fell in monthly and annual figures.

The AUD/USD pair extended its rise to a daily high of 0.6664, while US Treasury yields fell. The 10-year yield fell to 4.044%, the lowest level since February 2.

At the same time, the Dollar Index (DXY) plummets 0.25% to 102.52, threatening to fall to eight-week lows.

New York Fed's Williams: Neutral interest rates “remain quite low”

Earlier, New York Fed President John Williams said the tight monetary stance has cooled demand, adding that the Fed is responsible for achieving price stability. He said the Fed does not take politics into account in deliberations and stated that the economy in 2023 was remarkable.

Apart from this, Australian data revealed during the week showed a surplus in the trade balance, while the economy grew 0.2% quarter-on-quarter in the fourth quarter of 2023, below estimates of 0.3%. On an annual basis, the economy grew 1.5% year-on-year, above estimates but below the previous reading of 2.1%.

The fact that AUD/USD is above 0.6600 has opened the door to further increases, as confirmed by studies of the Relative Strength Index (RSI) in bullish territory. If buyers extend the rally towards 0.6700, this could open the door to test the January 5 high at 0.6747, before challenging the 0.6800 level. On the other hand, a pullback below the January 5 low at 0.6640 could aggravate the test of the 0.6600 figure.