Turning to the AUD/USD pair, producer prices will be in focus amid expectations of an August RBA rate cut. Economists forecast producer prices to rise 2.9% year-on-year in the second quarter, down from 3.7% in the first quarter.
Producers typically adjust prices subject to demand, lowering prices as demand weakens, and passing savings to consumers. Economists consider producer prices a leading inflation indicator, underscoring the significance of the data. A lower-than-expected reading may raise expectations of multiple RBA rate cuts, weighing on Aussie dollar demand.
Conversely, an unexpected rise in producer prices could suggest a less dovish RBA rate path, supporting appetite for the Aussie dollar.
AUD/USD Daily Outlook: US Jobs Report and Rate Differentials
Later today, the US Jobs Report will influence the Fed’s rate path and US-Australian interest rate differentials.
Stronger-than-expected labor market data would sink bets on a Fed rate cut. A more hawkish Fed policy stance would widen the rate differential in favor of the US dollar, pushing AUD/USD toward the $0.64 level. A break below $0.64 may enable the bears to target the $0.63623 support level.
On the other hand, a softer Jobs Report may raise expectations of a September policy move. A narrower rate differential could send AUD/USD toward the 200-day EMA. A sustained move above the 200-day EMA may pave the way to the 50-day EMA.
