Australian Dollar Outlook: Westpac Data May Underpin AUD/USD as Jobs Report Nears

• Asia-Pacific markets may see weak start after Wall Street losses

• RBNZ and Australian consumer confidence on tap for today

• AUD/USD approaches yearly low after overnight weakness

Asia Pacific markets look set to open lower after major equity indexes on Wall Street fell. A hotter-than-expected US inflation print reignited concerns over premature central bank tightening. That pushed the US Dollar and Treasury yields higher, which added to downward pressure on the risk-sensitive New Zealand Dollar and Australian Dollar.

Today‘s session will see the Reserve Bank of New Zealand’s July interest rate decision cross the wires. The central bank is expected to keep its Overnight Cash Rate (OCR) steady at 0.25%. However, rising prices and upbeat economic activity may pressure policy makers to speed up the rollback in its Large-Scale Asset Purchases programme, which would be seen as another step toward a rollback of the OCR.

The New Zealand Dollar would more than likely strengthen if the RBNZ decision is more hawkish than expected. Asias battle with the highly transmissible Delta Covid variant presents the biggest risk to economic growth. The island nation has kept a tight lid on any virus flair-ups, but at the cost of keeping its border mostly closed.

Elsewhere, Australia‘s July Westpac consumer confidence index is due out. The Australian Dollar remains near its 2020 low versus the US Dollar as lockdowns across New South Wales (NSW) weigh on sentiment. While today’s Westpac figure may cause a bout of volatility, Aussie Dollar traders are focusing on the June employment report set for release Thursday. Analysts expect to see 30k jobs added for June, with the unemployment rate dropping to 5.0%.

A better-than-expected jobs number will be an encouraging sign for the Australian economy, but the new wave of Covid-induced lockdowns may temper any hawkish bets. Alternatively, a downbeat jobs report will likely further soften the policy outlook from the RBA, which is already behind the curve in signaling a move to tighten.

The Australian Dollar dropped against the US Dollar overnight, putting the currency pair back near its 2020 low. The September swing high may step back in to offer a degree of support if prices continue lower. However, the MACD oscillator may soon send a bullish signal if the MACD line crosses above the signal line. Upside resistance may be found at the falling 20-day Simple Moving Average.