Australia’s unemployment rate rose to 4.5% in July, missing forecasts, while employment change contracted by 15.8K jobs.
The Australian Dollar declined against the USD, with AUD/USD trading near 0.7120 after Australia’s labor market data fell short of expectations. The unemployment rate climbed to 4.5% in July, above the anticipated 4.4%, while employment change dropped by 15.8K jobs, contrasting sharply with June’s 80.2K gain and forecasts of 15.0K growth.
Market expectations for further Reserve Bank of Australia tightening remain subdued, with only 12 bps of rate hikes priced in over a three-month horizon. Analysts cite weaker Chinese demand for Australian commodities and a softer domestic economic outlook as headwinds for the AUD. However, the pair’s downside may be limited by a weakening USD amid recent Fed policy signals.
Federal Reserve minutes indicated officials are prepared to raise rates if inflation persists, though the benchmark rate remains at 3.5%–3.75%. The mixed outlook for both currencies continues to influence AUD/USD movements.