AUD/USD gave up earlier gains on Friday after stronger US Nonfarm Payrolls data supported the US Dollar, while trade stayed quiet due to thin Good Friday liquidity. The pair was near 0.6900 after reaching 0.6916, and the US Dollar Index held above 100.
US Bureau of Labor Statistics data showed 178K jobs added in March versus 60K expected. February was revised to a loss of 133K from a previously reported decline of 92K, and the Unemployment Rate edged down to 4.3% from 4.4%.
Labor Data And Wage Trends
Wage growth eased in March, with Average Hourly Earnings up 0.2% month-on-month versus a 0.3% forecast and 0.4% previously. Earnings rose 3.5% year-on-year versus 3.7% expected and 3.8% previously.
Markets adjusted rate expectations after the data, with the CME FedWatch Tool showing pricing for unchanged rates through 2026. Traders also watched China’s March Manufacturing PMI, which rose to 50.4 from 49 and beat the 50.1 forecast, a data point linked to the Australian Dollar due to Australia’s trade ties with China.
The stronger-than-expected US jobs report adds weight to the US dollar, but the details tell a more complicated story for us. The big downward revision for the prior month and softer wage growth suggest the labor market isn’t running as hot as the headline number implies. This mixed signal, combined with holiday-thinned trading, means the initial move may not be sustained.
We see the market reinforcing its belief that the Federal Reserve will hold rates steady through 2026, a view supported by recent data. Core CPI, for instance, has remained stubbornly high, clocking in at 3.9% year-over-year in the latest release for February 2026. This persistent inflation makes it difficult for the Fed to consider cutting rates, providing a solid floor for the US dollar in the near term.
Australian Dollar Support From China
On the other side, the Australian dollar is finding support from signs of life in China’s economy. The better-than-expected manufacturing data from China is a significant positive, and we have seen this reflected in commodity markets where iron ore prices have now stabilized above $115 per tonne. This fundamental support from Australia’s largest trading partner should prevent a sharp decline in the Aussie.
Given these opposing forces, we believe AUD/USD is likely to be caught in a range in the coming weeks. This makes selling volatility an interesting play; we can look at strategies like an iron condor with strikes set around 0.6800 and 0.7050 to capitalize on this expected lack of direction. The Cboe FX Volatility Index has been creeping higher, suggesting we can collect a decent premium for these positions.
We saw a similar setup back in the third quarter of 2025, when strong US data was repeatedly neutralized by a positive turn in global risk sentiment. During that period, the pair remained stuck in a tight two-cent range for over a month, rewarding option sellers who bet on sideways movement. History suggests that when major currencies have competing fundamental drivers, a clear trend fails to emerge.
Therefore, while the dollar appears strong, an outright short position on the AUD/USD is risky. We should consider using options to define our risk, such as buying puts to hedge long positions or constructing spreads that profit from the pair staying within a specific price channel. Any sharp moves on low volume should be viewed with skepticism until the market returns to full liquidity next week.
