Australian Dollar extends gains amid mixed labor data, subdued US Dollar

• Australian Dollar appreciates as the ASX 200 Index continues to gain ground on Thursday.
• Australia's Employment Change came in at -6.6K and the Unemployment Rate increased by 3.8% in March.
• US President Joe Biden calls for tripling the existing 7.5% tariff rate on Chinese steel and aluminum.
• The decline in the US Treasury yields contributes to pressure to undermine the US Dollar.

The Australian Dollar (AUD) continues to gain ground on the second consecutive day on Thursday. The decline in the US Dollar (USD) contributes support for the AUD/USD pair. However, the mixed Australian employment data appears to exert downward pressure on the AUD.

The Australian Dollar gains momentum as the ASX 200 Index continues to climb on Thursday. The domestic equity market is bolstered by gains in mining stocks, supported by firmer metals prices. This positive momentum persists despite US stocks extending losses overnight amidst concerns that the Federal Reserve (Fed) may delay rate cuts further into the future.

The US Dollar Index (DXY) loses ground. primarily influenced by subdued US Treasury yields. This correction in the US Dollar is further reinforced by renewed selling pressure and an overall risk-on sentiment in the market. Investors watch for the release of weekly Initial Jobless Claims and Existing Home Sales later on Thursday, which could provide further insight into the state of the US economy and potentially impact the direction of the US Dollar.

Daily Digest Market Movers: Australian Dollar extends gains amid mixed labor data

• Australia's Employment Change posted a reading of -6.6K for March, against the expected 7.2K and 117.6K prior.
• Australia's Unemployment Rate increased by 3.8% in March, lower than the expected 3.9% but higher than the previous reading of 3.7%.
• US President Joe Biden spoke at the heart of the American steel industry in Pittsburgh on Wednesday, emphasizing the need for increased pressure on the Chinese steel sector. He has directed US Trade Representative Katherine Tai to consider tripling the current 7.5% tariff rate on Chinese steel and aluminum, as reported by CBS News.
• Federal Reserve Bank of Cleveland President Loretta Mester, speaking on Wednesday, acknowledged that inflation has exceeded expectations, and the Fed needs further assurance before confirming the sustainability of 2% inflation. She also stated that monetary policy is well-positioned, with the possibility of a rate cut if labor market conditions worsen.
• Fed Governor Michelle Bowman commented on Wednesday that progress in inflation is slowing, with a potential stall. Bowman also noted that monetary policy is currently restrictive, and its sufficiency will be determined over time.
• The Federal Reserve's Beige Book survey of regional business contacts indicates that the US economy has "expanded slightly" since late February. Furthermore, firms reported facing increased challenges in passing on higher costs.
• US Building Permits (MoM) fell to 1.458 million in March, compared to the expected 1.514 million and 1.523 million prior. Housing Starts declined to 1.321 million MoM from 1.549 million, falling short of the expected 1.480 million.

Technical Analysis: Australian Dollar hovers around the major level of 0.6450

The Australian Dollar traded around 0.6440 on Thursday. The 14-day Relative Strength Index (RSI) suggests a bearish sentiment for the AUD/USD pair as it remains below the 50 level. Key resistance for the pair is anticipated at the 23.6% Fibonacci retracement level of 0.6449, coinciding with the significant level of 0.6450. A breach above this level could strengthen the pair's momentum, potentially testing the nine-day Exponential Moving Average (EMA) at 0.6475, followed by the psychological barrier of 0.6500. On the downside, notable support is identified at the psychological level of 0.6400. A breach below this level might increase downward pressure on the AUD/USD pair, potentially leading it towards the major support level at 0.6350.

AUD/USD: Daily Chart