Australian dollar falls as rising unemployment and RBA caution dim rate-hike support, eroding recent gains against the USD.
The Australian dollar retreated from a four-year peak of 0.726 versus the US dollar after domestic labor market weakness and soft Chinese economic data weighed on sentiment. Rising unemployment and a shift in RBA rhetoric toward a potential pause in rate hikes undermined recent gains driven by the central bank’s aggressive tightening cycle.
The Reserve Bank of Australia raised rates three times in its last three meetings, outpacing other G-10 central banks. However, minutes from its latest policy meeting and comments from Chief Economist Sarah Hunter suggest policymakers are now leaning toward a wait-and-see approach, reducing support for the currency.
Analysts warn that if the RBA’s hiking cycle has ended, the AUD’s upward momentum could fade further. Weak jobs data released this week added to downward pressure, signaling domestic economic challenges.