The Australian Unemployment Rate is expected to remain stable at 4.2% in August, with an anticipated Employment Change of 25K, half of what was reported in July. The Australian Dollar is currently trading below 0.6800 against the US Dollar with a bullish bias post the Federal Reserve’s latest announcement.
The Australian Bureau of Statistics is set to release the monthly employment report on Thursday, with expectations of adding 25K new positions in August. It is essential to differentiate between full-time and part-time jobs in the report, where full-time jobs have more weight in determining the AUD’s direction due to their consistency in income.
In July, Australia created 60.5K full-time jobs but lost 2.3K part-time positions, resulting in a net Employment Change of 58.2K with an increase in the Unemployment Rate to 4.2%. The financial market predicts that the Unemployment Rate will remain steady in August, while job creation is expected to continue at a slower pace.
The Reserve Bank of Australia (RBA) has been maintaining the Official Cash Rate at 4.35% since November 2023 and does not show any signs of reducing interest rates. The current inflation rate stands at 3.8% YoY, and the economy grew by 1% YoY in the second quarter of the year. However, growth remains sluggish, with the weakest expansion recorded since the 1991-92 year.
RBA Governor Michele Bullock emphasized that market expectations for an interest rate cut do not align with the Board’s thinking. She mentioned that the Board does not anticipate cutting rates in the near term if the economy evolves as anticipated. The Australian Dollar is likely to be influenced by the upcoming employment report release, with the AUD/USD pair currently trading near the 0.6800 level.
The AUD/USD pair may see a surge if the employment report exceeds expectations, potentially targeting the December high at 0.6870. On the contrary, discouraging employment figures could have a negative impact on the pair, with potential support levels around 0.6740 and 0.6700. Overall, the Australian economy’s performance will play a crucial role in determining the future monetary policy decisions of the RBA.
