Australian Dollar tallies weekly losses, RBA hawkish stance to limit the downside

• AUD/USD registered a significant drop on Friday, slipping below 0.6700.
• Employment data continues to shape possible RBA and Federal Reserve decisions.
• The Aussie’s downside is limited by the hawkish RBA stance which hasn’t shown signs of embracing cuts.

In Friday’s session, The Australian Dollar (AUD) saw considerable losses against the USD, falling by 0.30% to 0.6690. This slump in the AUD/USD exchange rate is mostly due to the strengthening of the US Dollar (USD) amid increased aversion to risk. However, higher-than-expected Employment Change figures from Australia, indicating a tight labor market, could curb the AUD’s downside by raising concerns over a potential interest rate hike from the Reserve Bank of Australia (RBA) and hence limit the pair’s downside.

Despite some signs of fragility in the Australian economy, persistently high inflation is prompting the RBA to delay rate cuts, potentially limiting any further decline in the AUD. The RBA remains among the last central banks within the G10 countries expected to begin rate cuts, a commitment that could bolster the AUD’s position.