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AUD/USD falls as U.S. bond yields rise, traders speculate the Fed may ease policy
Trader sentiment remained upbeat as speculation grew that the Federal Reserve would join the ranks of potential policy easing. The latest U.S. consumer inflation report on Wednesday increased the odds that the Federal Reserve will cut interest rates by at least 41 basis points by the end of 2024.
On Thursday, the number of Americans filing new claims for unemployment benefits rose by 222,000 last week, more than expected but down from 232,000 the previous week. Other data showed mixed housing data, with housing starts rising at an annual rate of 5.7%, while building permits plummeted at -3%.
Other data showed the Federal Reserve reported industrial production stalled in April at a monthly rate of 0%, below expectations and the previous reading of 0.1%.
Meanwhile, several Federal Reserve officials spoke on Thursday, saying the central bank should maintain higher interest rates for longer as they wait for more signals of a fall in inflation. Federal Reserve regional bank presidents Loretta Mester, John Williams and Thomas Barkin believe it may take longer than expected to control inflation to the 2% target longer.
In Australia, the latest employment data showed 38,500 jobs were added in April, but the unemployment rate rose to 4.1% from 3.9%. The change in part-time employment in Australia increased by 44,600 in April, while the change in Australia’s full-time employment in April was -6,100.
Analysts at ANZ Bank said: “Weak hourly wages and slower annual wage growth together confirm the softness of the labor market. Judging from these data, our policy expectations for the Reserve Bank of Australia have not changed.
There are no important economic events to be announced in Australia during the day, while in the United States, Federal Reserve Governor Christopher Waller will make further speeches.
