AUD/USD price analysis: Market prices for RBA easing

• Australia’s economy grew by 0.3% in the third quarter.

• Market participants increased the likelihood of an RBA rate cut in April to 96% from 73%.

• The number of job vacancies in the USA rose to 7.74 million.

AUD/USD price analysis shows a rapid collapse in the Aussie as markets price in a higher probability of a Reserve Bank of Australia interest rate cut in April. Meanwhile, the dollar remained strong following positive employment numbers in the previous session.

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Data on Wednesday showed Australia’s economy grew 0.3% in the third quarter, well below estimates of a 0.5% expansion. The weak economic data raised fears of a rapid economic slowdown. As a result, market participants increased the probability of an RBA rate cut in April from 73% to 96%.

The RBA remained cautious while other major central banks cut borrowing costs. Policymakers have noted that interest rates in Australia are not as high as other major economies. However, signs of weaker economic performance suggest that demand is falling due to high borrowing costs. Therefore, it will put pressure on the central bank to reduce interest rates.

On the other hand, the dollar gained on Tuesday after data showed the number of job openings in the US rose to 7.74 million, above forecasts of 7.51 million. Higher than expected job vacancies are a sign that demand for workers is high. The labor market therefore remains robust. However, market participants are awaiting the more important non-farm payrolls report due on Friday. This will provide a clearer picture of the labor market and shape the outlook for Fed rate cuts. Now traders estimate a 75 percent chance of a rate cut in December. A poor jobs report will increase that likelihood and weigh on the dollar. On the other hand, robust numbers do the opposite.

AUD/USD Key Events Today

AUD/USD Technical Price Analysis: Bears break below range support

On the technical side, AUD/USD price has broken out of consolidation with bears targeting the 0.6400 support level. Before this move, the price was range-bound between the support at 0.6450 and the resistance level at 0.6550.

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However, the bears gained enough strength to break the range support, likely triggering a new downtrend. The price is now well below the SMA, with the RSI approaching oversold territory. A series of lower highs and lows will confirm a new downtrend.

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