AUD/USD pair rises above 0.6850

• AUD/USD rose after weak US ISM services data, which contracted to its lowest level since 2020.
• The US economy added more jobs than expected, while wage growth eased, helping the Federal Reserve work to control inflation.
• Fed policymakers have reiterated the need to rein in inflation, stressing that they will stay the course.

The Australian dollar (AUD) rose against the US dollar (USD) after the release of important economic data in the United States (US) which, although optimistic, failed to support the US dollar. In addition, the services PMI survey fell into contraction territory, fueling speculation of a recession in the United States. At the time of writing, the pair Australian dollar / US dollar It was trading at 0.6866, about 40 pips above the 200-day moving average.

Mixed US economic data supported the AUD/USD

US labor market data for December showed a mixed balance. Although 223,000 jobs were added to the economy, beating estimates of 200,000 jobs, fears of persistent wage inflation have faded. Average hourly earnings increased 0.3% month over month, but year over year fell to 4.6%, against a consensus of 5.0%. This slowdown will be welcomed by those responsible for feed itwho consider wage pressures to be one of the factors keeping inflation above its 2% target.

The AUD/USD pair rose after the release and approached 0.6800. However, weaker-than-expected ISM services data and a contraction in US factory orders gave AUD/USD another boost, extending gains to a two-day high of 0.6849.

Data released on Friday showed that the ISM Services Purchasing Managers’ Index unexpectedly shrank to 49.6 versus the 55 estimate, its lowest reading since May 2020, and trailing its jumps of 56.5 in November. PMI readings below 50 signal contraction.

Aside from this, Fed spokesmen continued to cross wires newsletter. Earlier, Atlanta Fed President Raphael Bostick said the December jobs report does not change his view of the economy, stressing the need to “stay on course.” Subsequently, Fed Governor Lisa D. Cox stated that inflation is “very high” and “very worrying” despite the recent reports.

In Australia, next week’s data will include Building Permits, monthly CPI release, retail sales and trade balance. In the US, the Consumer Price Index (CPI), Jobless Claims and Consumer Sentiment from the University of Michigan (UoM) will be published.

Key technical levels for the Australian dollar / US dollar