Aussie hits 2025 high on strong jobs data

The Australian dollar has posted strong gains on Thursday.  In the European session, AUD/USD is trading at 0.6377, up 0.55% on the day.

Australia's labor market continues to shine.  The economy created 44 thousand jobs in January, blowing past the market estimate of 20 thousand.  This followed an upwardly revised gain of 60 thousand in December.  Impressively, full-time employment jumped 54.1 thousand and part-time employment decreased by 10.1 thousand.  The unemployment rate crept up to 4.1% from 4%.

The hot jobs report was well-received by the market and sent the Australian dollar as high as 0.6379, its highest level since December 16.  What impact will the release have on interest rates?

The Reserve Bank of Australia cut the cash rate by a quarter-point on Tuesday to 4.10%.  This was the first rate cut in over four years but the RBA sounded hawkish at the meeting, saying that there were upside risks to inflation and the Bank would be cautious about continuing to cut rates.  The strong jobs report lowers the pressure on the RBA to deliver another cut at the next meeting in April, but the markets have priced in a 75% chance of  a rate reduction in May.

The Federal Reserve minutes from the January meeting expressed concern about upside risks to inflation.  In particular, members were worried about the effects of "potential changes in trade and immigration policy".  US President Trump's threats of tariffs and mass deportations could stoke inflation, which would delay rate cuts.  The minutes also noted "substantial optimism about the economic outlook".  The Fed held rates at the January meeting and meets next in March.  The markets have priced in the next  rate cut in July or September.

• The next resistance line is 0.6402, which has held since December 2024. Above, there is resistance at 0.6452
• 0.6318 and 0.6268 are the next support levels