Weak US Jobs Boost Fed-Cut Odds; AUD Rises on GDP!

Fresh US labor signs and unexpectedly strong Australian growth reshuffled FX positioning over the past 24 hours. Slower US job dynamics pushed expectations of a near-certain Federal Reserve rate cut in September, while Australia’s quarterly expansion reduced near-term easing odds at the Reserve Bank of Australia and supported the Australian dollar.

US labor cools; Fed-cut odds surge

Data released overnight showed further softening in US labor indicators, including a marked drop in job openings and other measures suggesting demand for workers is easing. Traders quickly repriced interest-rate expectations, pushing implied odds of a September Fed cut to roughly the high-90s percentile. That shift is the dominant driver for currency flows across developed and emerging FX.

What traders saw

• Key labor series fell short of prior strength, reinforcing the narrative that wage and employment pressures are moderating.
• Benchmark US yields declined as traders absorbed a higher probability of near-term easing, which in turn capped dollar gains.

Immediate FX implications

The dollar broadly steadied at lower levels after the repricing. FX participants are transitioning from a tightening-focused stance to one that anticipates easier Fed policy, which generally favors higher-yielding currencies and risk-sensitive crosses versus the dollar. For USD watchers, the focus now shifts to incoming inflation prints and the next Fed communications for confirmation.

Australia’s Q2 GDP outperforms; AUD firmed

Australia reported stronger-than-expected quarterly growth, with activity expanding at a pace that beat consensus. The surprise trimmed the probability of near-term RBA easing and supported the Australian dollar, which advanced modestly versus the dollar on the data.

Why it matters for AUD

• Higher-than-expected GDP reduces immediate pressure on the RBA to cut, preserving a relatively higher local yield profile compared with peers.
• Domestic resilience gives AUD short-term tactical support, especially against a dollar that’s reacting to US policy repricing.

Short-term trade ideas and risk points

• USD (DXY): Expect elevated sensitivity to US inflation and payroll data. A softer CPI or payrolls print would likely extend the dollar’s pullback; a surprise upside would reverse some losses. Monitor 103.00 as a key resistance and 101.50 as nearby support (adjust for your pricing feed).
• AUD/USD: With Q2 GDP strength, look for the pair to test higher short-term resistance near 0.6650 if US yields continue to fall. Failure to sustain yields decline or a renewed USD bid could drag the pair back toward 0.6400–0.6450.

Bottom line: Slower US labor conditions have tilted FX pricing toward earlier Fed easing, pressuring the dollar, while Australia’s surprise growth print has given the AUD tactical support. Traders should watch upcoming US inflation data and RBA commentary for confirmation and directional cues.