The AUD/USD slipped on Thursday ahead of the US weekly initial jobless claims data. The pair was trading at 0.74598 which was a 0.3% decline from the previous day.
AUD/USD Outlook
Australia Economic Stance
According to the Australian Bureau of Statistics (ABS), the seasonally adjusted unemployment rate for June 2021 fell to 4.9% from 5.1% in May. This was better than the expected 5.0%. The unemployment rate has been declining for eight consecutive months.
According to the head of labor statistics at ABS, the unemployment rate for June was the lowest since December 2010. However, employers are still reporting high numbers of job vacancies and difficulties in finding suitable people to do them.
The Youth unemployment rate decreased 0.5% to 10.2% which was still 1.4% below pre-pandemic levels. Employment increased to 29,000 in the same month. This was, however, lower than the 115,000 in the previous month. This saw the AUD/USD pair slump.
The underemployment rate snapped from its decline and rose 0.5% in June to 7.9%. This reflected the fall in hours worked in Victoria since the tightening of lockdown restrictions.
The participation rate was unchanged in June. It came in at 66.2% hovering near its historical high seen in March 2021. With the strict lockdown restrictions, it is unlikely that the employment rate will improve sooner.
US Inflation Concerns
The AUD/USD pair edged higher after the release of better than expected US Producer Price Index (PPI) data for June. The PPI came in at 1.0% beating the 0.6% estimate forecast. On an unadjusted basis, the final demand index rose 7.3% for the 12 months ending June.
An increase in prices for final demand services contributed almost 60% of the June advance of the final demand index. Prices for final demand excluding foods, energy, and trade services went up 0.5%. for the 12 months ending June, the index rose 5.5%. this was the largest increase since August 2014.
The AUD/USD pair will react to the US weekly initial jobless claims data later in the day. The jobless claims are expected to decline to 360,000 from the previous 373,000.
