Australian dollar edged higher against the American dollar during the Early Asian session. This moves comes after the strong jobs data which rises the likelihood of the central bank to wind down its pandemic-era bond buying early next year, following in the foot steps of the U.S. Federal Reserve.

Australia Unemployment Rate dropped to 4.6%, below 5.5% forecast and 5.2% prior, whereas the Employment Change rose to 366.1K from +200K exceeding the -89.1K forecast and -56.0 k previous readout. Further, the Participation Rate also crossed 64.6% market consensus and prior record with 66.1% figures.

Along with the upbeat employment data favoring the Aussie, the speech by  Reserve Bank of Australia (RBA) Governor Philip Lowe coming hours after the Fed said its bond buying program may end by February, also favored the quote AUD/USD.

RBA is is open to ending bond buying as early as February should the economy recovery quicker than currently expected but it is unlikely that interest rates will need to rise in 2022.

In a speech in regional New South Wales, Reserve Bank of Australia (RBA) Governor Philip Lowe said the spread of the Omicron variant was a downside risk, but expected the economy to weather any headwinds thanks in part to a massive build up in household savings.

Lowe repeated that the bank would not raise the 0.1% cash rate until inflation was sustainably within its 2-3% target band and Australia was still “a fair way” from that point. “In our central scenario, the condition for an increase in the cash rate will not be met next year,” he also added. “It is likely to take time for that condition to be met and the Board is prepared to be patient.”

Lowe also said the “RBA Board had discussed options for its bond buying, or quantitative easing, which currently stands at A$4 billion ($2.87 billion) a week and is set to be reviewed at the Feb. 1 policy meeting.”

Marcel Thieliant, a senior Australia and New Zealand Economist for Capital Economics, said in a note “The remarkable recovery in Australia’s labour market following the recent lockdowns suggests that the Reserve Bank of Australia will end its asset purchases altogether in February.”

Furthermore, Australia’s Commonwealth Bank (CBA) released preliminary PMI data for December. The activity numbers showed Manufacturing gauge rose past 57.1 forecast to 57.4 but easing below 59.2 previous readouts. Further, the Services PMI also stepped back from 55.7 to 55.1, dragging the Composite PMI to 54.9 from 55.7, versus 53.7 market consensus.

AUD/USD 4 Hour Chart:

Support: 0.7112 (S1), 0.7058 (S2), 0.7026 (S3).

Resistance: 0.7198 (R1), 0.7230 (R2), 0.7284 (R3).

The record surge in Australian jobs favors the Aussie. We expect a bullish trend for AUD/USD.