Recent U.S. labor data (Nonfarm Payrolls) has disappointed traders, with a major revision revealing fewer job gains than expected. This has weakened confidence in the Federal Reserve's hawkish (tough) stance and raised expectations for rate cuts, pushing the U.S. dollar lower and lifting AUD/USD higher. Markets are now pricing in nearly a 100% chance of a Fed cut at the upcoming September 17 FOMC (Federal Open Market Committee) meeting.
Weak Nonfarm Payrolls, Strong Commodities Lift AUD/USD
Recent U.S. labor data (Nonfarm Payrolls) has disappointed traders, with a major revision revealing fewer job gains than expected. This has weakened confidence in the Federal Reserve's hawkish (tough) stance and raised expectations for rate cuts, pushing the U.S. dollar lower and lifting AUD/USD higher. Markets are now pricing in nearly a 100% chance of a Fed cut at the upcoming September 17 FOMC (Federal Open Market Committee) meeting.
Despite a drop in domestic confidence data, the Australian dollar continues to find strength. It is supported by strong commodity markets and global investor optimism, with demand for key exports such as iron ore, coal, natural gas, gold, and agricultural products playing a big role. The Aussie has surged to six-week highs on this backdrop. While confidence at home has softened, Australia's commodity-linked economy still benefits from favorable global conditions.
Key Drivers to Watch
- Fed policy: If the Federal Reserve signals more rate cuts or softer policy, the Aussie could rise further.
- Commodity trends: Strong gold and base metal prices (Copper, Aluminum, Zinc, Nickel, Lead) boost AUD, but falling prices could hurt it.
- China demand: As Australia's largest trading partner, signs of a Chinese rebound would lift the currency.
- Domestic fundamentals: Decisions by the RBA (Reserve Bank of Australia) on interest rates, along with reports on employment, inflation, and overall economic growth, will play a major role in shaping how investors view the Australian dollar. For example, stronger job numbers or higher inflation might push the RBA to keep rates higher, supporting the Aussie. On the other hand, weak growth or rising unemployment could pressure the currency lower.
AUD/USD Outlook
Expectations of U.S. rate cuts, combined with Australia's relatively steady economy, suggest more near-term gains for AUD/USD. A push above 0.66240 could open the way toward 0.6663–0.67051. However, weaker commodity prices or unexpectedly tough Fed messaging could pull it back toward 0.65414.
NZD/USD Climbs as Weak U.S. Jobs Lift Kiwi
The New Zealand dollar (Kiwi) has also been climbing as the U.S. dollar weakens. Softer U.S. job numbers and growing expectations that the Fed may cut rates by as much as 0.50% have boosted demand. NZD/USD is now trading close to the 0.59198–0.59589 zone, a key barrier for further gains.
Though partly a chart story, it ties back to fundamentals. The New Zealand dollar is approaching the 0.59589 level, and if positive sentiment continues, it could push through 0.6000 to 0.60456.
Key Influences
- U.S. economic data: The next jobs and inflation releases will heavily influence Fed decisions and therefore the dollar — especially if the Fed opts for a large cut.
- New Zealand's domestic outlook: RBNZ (Reserve Bank of New Zealand) policy, plus local data on jobs, inflation, and growth, remain important. If the RBNZ takes a different path from other central banks, the kiwi could move independently.
- Global sentiment: Like the Aussie, the kiwi benefits when investors feel confident and take on risk. A shift to caution could reverse its gains quickly.
NZD/USD Summary
Fundamentals still favor more upside for NZD/USD, especially if U.S. weakness deepens. A move above 0.59589 could carry it to 0.60000, fueled by Fed cut expectations. But external shocks or a sudden risk-off shift in markets could halt the rally just as quickly to the first support level at 0.58322.
Final Thoughts
- The Fed's path remains the central driver. Dovish surprises, such as larger-than-expected rate cuts or weaker U.S. growth, would favor both the AUD and NZD.
- Commodities are a stronger anchor for the Aussie (AUD), while the Kiwi (NZD) thrives when global risk sentiment is upbeat.
- Near-term catalysts include upcoming U.S. jobs and inflation data, along with central bank commentary.
- Resistance zones to watch: ~0.66240–0.67051 for AUD/USD and ~0.59589–0.60456 for NZD/USD. A breakout in either pair would likely confirm sustained strength, while reversals may point to shifting sentiment.