Aussie dollar is shaken by economic data and iron ore prices

The latest Australian labor data outperform market expectations, but the decline in iron ore prices has burdened the Australian dollar.

The Australian dollar was monitored volatile in this Thursday trading (17/February). AUD/USD exchange rate is traded in the range of 0.7149-0.7215, while AUD/NZD falls 0.2 percent to the range of 1,0740s. The latest Australian labor data outperform market expectations, but the decline in iron ore prices has burdened the Aussie dollar.

AUD/USD Daily Graph Via TradingView

The Australian Bureau of Statistics (ABS) reported that the economy added 12.9K work in January 2022, as well as dismissing the condenser forecast of the loss of 15.0k work in that period. The unemployment rate of Australia also survives the lowest record of one decade at 4.2 percent, while the labor force participation rate increases from 66.1 percent to 66.2 percent.

The series of data shows that the impact of Omicron on the Australian economy was not as bad as before. Market expectations for RBA interest rates are maintained. The Futures market now takes into account the increase in RBA interest rates of more than 100 basis points as of December 2022.

High interest rate expectations support the Australian dollar, but have not been able to trigger a significant acceleration of bullish rally. Because the Australian central bank officials are still reluctant to discuss interest rates.

The RBA meeting earlier this month indicated that the readiness of the central bank to tolerate the inflation rate was slightly above the target of 2-3 percent for some time, because the acceleration of inflation was considered not to take place on a sustainable manner. The current level of Australian core inflation has only reached 2.6 percent, so it is still quite far from the threshold that cannot be tolerated by the RBA. The next market will monitor the release of Australian inflation next week to measure the prospect of "RBA Rate Hike" again.

Meanwhile, the price of iron ore loss for four consecutive days. The Chinese government's action tightened the supervision of the steel producers to reduce the rally of the price of this commodity, so that it contributed to Australia. Iron ore is the main export commodity of Australia, while the majority of Australian iron ores are exported to China.