AUD/USD to challenge the key 0.72 support following bleak jobs report – MUFG

Australia’s monthly labour market data has been a big miss. Subsequently, the employment report has failed to dampen Reserve Bank of Australia (RBA) hike expectations, supporting the view of economists at MUFG Bank to expect aussie’s depreciation. 

AUD/USD to move downward following the disappointing jobs report

“The softer than expected employment report for October supports the RBA’s latest guidance that it is still not planning to begin rate hikes until at least 2023 at the earliest.”

“We still believe that risks remain skewed to the downside for the Australian dollar. We expect the Fed to be more active in tightening policy than the RBA next year, and the Australian dollar will prove more sensitive to the ongoing slowdown in China’s economy.”

“We remain wary of the risk of a sharper slowdown in China’s economy resulting from weakness in the real estate sector. The price of iron ore is continuing to fall back to pre-COVID levels providing one potential warning sign.”

“We expect AUD/USD to re-test key support at the 0.7200-level in the near-term.”