• US ADP Employment Change crushed estimates, while unemployment claims missed estimates, foreseeing a solid US Nonfarm Payrolls report.
• The US Trade Balance deficit shrank, boosting the US Dollar.
• AUD/USD Price Analysis: Could extend its losses after dropping below the 200-day EMA.

The Australian Dollar (AUD) loses ground against the US Dollar (USD) after a tranche of economic data revealed in the United States (US) confirmed a robust labor market. Therefore, traders’ speculations augmented that the Federal Reserve (Fed) would continue tightening monetary conditions. At the time of writing, the AUD/USD is trading at 0.6767.

US labor market remains solid, weighed on AUD/USD

Before Wall Street opened, the ADP Employment Change report showed that private hiring increased by 235K for December, smashing the 153K estimated by analysts and almost doubled of November figures. The report showed that service providers added 213K while manufacturing a meager 22K. ADP’s chief economist, Nela Richardson, said, “The labor market is strong but fragmented, with hiring varying sharply by industry and establishment size.” She added that “business segments that hired aggressively in the first half of 2022 have slowed hiring and, in some cases, cut jobs in the last month of the year.”

Later the US Department of Labor revealed that Initial Jobless Claims for the last week rose less than estimates, by 204K vs. 225K expected, while continuing claims were lower than foreseen, at 1.694M vs. 1.708M estimated. At the same time, the Trade Balance deficit shrank compared with expectations, coming at $-61.51B vs. $-73.0B.

After the US economic data release, the AUD/USD dropped from around 0.6840 toward the daily low of 0.6766, failing to hold to its gains above the 200-day Exponential Moving Average (EMA), which sits a 0.6820.

Meanwhile, Australian data revealed in the Asian session witnessed further deterioration in the Services and Composite PMI on its final readings in December, each at 47.3 and 47.5, trailing November figures.

Ahead of the week, traders’ focus shifts toward Friday’s US Nonfarm Payrolls report. Following the release of the Federal Reserve’s (Fed) December minutes, officials stressed that the labor market remained strong, emphasizing the need for a higher unemployment rate. Therefore, solid US NFP data might increase the likelihood of a 50 bps rate hike by the US central bank.

AUD/USD Price Analysis: Technical outlook

After failing to break Thursday’s high of 0.6886 and dropping beneath the 200-day EMA, the AUD/USD might extend its losses during the day. Its first hurdle on its downtrend would be the 20-day EMA at 0.6747, followed by the 100-day EMA at 0.6706 and the 50-day EMA at 0.6696. Once all those levels are cleared, that could pave the way toward November’s 21 low at 0.6584.