Australian dollar shrugs after weak jobs report

The Australian dollar is showing limited movement on Thursday. In the European session, AUD/USD is trading at 0.6496, up 0.07%.

Australian job growth flatlines

Australia’s employment report was softer than expected, but the Australian dollar didn’t show much reaction. Net employment rose by just 500, well off the market estimate of 30,000 and a huge improvement from the revised December reading of -62,800. The unemployment rate climbed to 4.1%, up from 3.9% in December. This is the highest unemployment rate since January 2022.

The employment data points to a cooling labour market, as Australia finds itself in an economic slowdown. The labour market has been resilient despite the steep rate-tightening cycle, which saw the Reserve Bank of Australia raise rates some 13 times since May 2022.

The RBA has reiterated that its rate decisions will data-dependent and today’s soft employment figures support the central bank taking the plunge and lowering rates, likely late in the year. The RBA has kept rates unchanged at 4.35% since November but has not signaled that it is done raising rates.

Australia releases inflation expectations earlier today, which remained unchanged at 4.5% for a third straight month and above the forecast of 4.3%. Inflation is running at a 4.1% clip, well above the RBA’s target range of 1 to 3 per cent. The battle with inflation is far from over and the hawkish RBA will be looking for clear signs that inflation is heading lower before it pivots and signals that rate cuts are coming.

AUD/USD Technical

• AUD/USD tested support at 0.6483 earlier. The next support line is 0.6441
• 0.6554 and 0.6583 are the next resistance lines

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.