• AUD/USD edges higher but remains below 0.6300 ahead of the US NFP data for January.
• The US NFP data would drive market expectations for the Fed’s interest rate outlook.
• Investors await the Trump-Jinping meeting to get more developments on the trade relations between China.

The AUD/USD pair ticks higher in Friday’s European session but continues to face pressure near 0.6300. The Aussie pair turns sideways as investors await the United States (US) Nonfarm Payrolls (NFP) data for January, which will be published at 13:30 GMT.

Market participants will keenly focus on the employment data, which will provide cues about how long the Federal Reserve (Fed) will keep interest rates steady between 4.25% and 4.50%.

According to estimates, the US economy added 170K workers last month, fewer than 256K in December. The Unemployment Rate is estimated to have remained steady at 4.1%. Signs of a strong job market would boost market expectations that the Fed will keep interest rates steady for longer. On the contrary, soft numbers would force traders to increase their dovish bets.

Ahead of the US NFP data, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades in a tight range below 108.00.

Meanwhile, the Australian Dollar (AUD) has performed strongly in the past few trading sessions amid expectations that US President Donald Trump and Chinese Leader XI Jinping will have a meeting to reach a deal and roll back tariffs. This week, China retaliated against 10% tariffs from Donald Trump by imposing 15% levies on coal and Liquified Natural Gas (LNG), and 10% for crude oil, farm equipment and some autos.

Such a scenario will be favorable for the Aussie dollar as Australia is the leading trading partner of China.

On the monetary policy front, traders have fully priced in a 25-basis points (bps) interest rate reduction by the Reserve Bank of Australia (RBA) in the policy meeting on February 18.

• USD/JPY rises to 152.10 amid a sour market mood.
• Markets await US jobs data, with NFP expected at 175k.
• Fed officials remain cautious on rate cuts despite easing inflation.

The USD/JPY pair climbed 0.48% to 152.10 on Friday, supported by the US Dollar’s resilience amid cautious commentary from Federal Reserve officials. With the US labor market remaining solid, traders are eyeing the upcoming Nonfarm Payrolls (NFP) report, which is expected to show a 175k job gain for January. A whisper estimate suggests a slightly stronger 199k reading, signaling continued labor market strength.

With expectations pointing to an unchanged unemployment rate of 4.1% and wage growth stabilizing at 3.8% YoY, markets remain attentive to any surprises in the data. Given recent jobless claims trends and other indicators, there is potential for an upside surprise, which could reinforce the Fed’s cautious stance on rate cuts.

Federal Reserve policymakers continue to push back against early rate cuts. Dallas Fed’s Logan noted that even if inflation moves closer to 2% in the coming months, it would not necessarily justify imminent easing. She emphasized that a stable labor market coupled with lower inflation would signal a neutral policy stance, leaving little room for near-term cuts. Meanwhile, Chicago Fed’s Goolsbee highlighted growing fiscal uncertainties, suggesting they could slow the pace of future rate reductions. Fed officials Bowman and Kugler are also set to speak later today, potentially providing additional insights on monetary policy direction.

In fact the Fed’s sentiment index remains deep in hawkish territory and provides a cushion to the US Dollar but the bank’s stance might change after today’s data.

USD/JPY Technical outlook

USD/JPY continues to gain traction, with technical indicators recovering from recent lows. The Relative Strength Index (RSI) is near the 30 level which suggests intense selling pressure which could trigger a correction. If buying interest persists, the pair could extend gains toward resistance at 152.50, while support remains at 151.50. The outlook favors the bulls, provided the pair holds above key levels.

• AUD/USD stands around 0.6280 as markets await US NFP data.
• Fed expected to hold rates steady; June rate cut remains in focus.
• Australian Dollar vulnerable ahead of RBA’s anticipated rate cut.

The AUD/USD moves around 0.6280 on Friday as investors turned their attention to the upcoming US Nonfarm Payrolls (NFP) report. With expectations set at 170K job additions, down from 256K in December, the data will be pivotal in shaping the Federal Reserve’s (Fed) monetary policy outlook. A stronger-than-expected print could reinforce the Fed’s cautious stance, while weaker figures may fuel rate-cut speculation.

The US labor market remains a focal point for traders, with the Unemployment Rate forecasted to hold steady at 4.1%. A robust reading would strengthen the case for the Fed to maintain its wait-and-see approach on rate adjustments. On the other hand, a weaker print could revive dovish bets, with markets already pricing in a rate cut by June, as per the CME FedWatch tool.

While the US job market takes center stage, the Australian Dollar faces its own challenges. Markets widely anticipate the Reserve Bank of Australia (RBA) to lower the Official Cash Rate (OCR) to 4.1% this month. With a rate cut almost certain, the Aussie may struggle to hold onto gains, especially if broader risk sentiment turns negative.

AUD/USD Technical outlook

The AUD/USD pair has gained traction, pushing past the 20-day Simple Moving Average (SMA) at 0.6230. The Relative Strength Index (RSI) stands at 57, indicating a neutral to mildly bullish bias, while the Moving Average Convergence Divergence (MACD) histogram shows decreasing green bars, suggesting a potential loss of upward momentum. If the pair sustains above 0.6250, further upside toward 0.6320 remains possible.

• USD/CAD retreats to 1.4305 after softer-than-expected US NFP data.
• US Unemployment declined to 4% while hourly earnings remained stable.
• Canadian unemployment falls to 6.6%, but remains above forecasts.

The USD/CAD pair pulled back to 1.4305 following the release of January’s Nonfarm Payrolls (NFP) data, which fell significantly short of expectations. The report showed the US economy added just 143K jobs, well below the 307K forecast, triggering a pullback in the US Dollar. Meanwhile, the unemployment rate ticked down to 4%, aligning with market projections, while wage growth remained firm.

While the headline NFP figure disappointed, wage growth remained stable. Average hourly earnings rose by 0.5% month-over-month as expected, while the annual figure edged up to 4.1%, surpassing the 3.9% estimate. Additionally, the labor force participation rate improved slightly to 62.6% from 62.5%, suggesting continued resilience in employment metrics despite weaker hiring trends.

On the Canadian side, unemployment declined to 6.6%, improving from 6.8% but still exceeding the projected 6.7%. The data suggests that while job conditions in Canada have somewhat improved, lingering softness in the labor market could keep the Bank of Canada (BoC) cautious regarding future rate adjustments.

USD/CAD Technical outlook

USD/CAD retraced to 1.4305, marking a moderate pullback but indicators including the Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) look weak on the daily scale. The pair remains in an downtrend in the short-term after losing the 20-day Simple Moving Average (SMA), but buying pressure could persist if sellers fails to secure the 1.4300 support zone.