Australian Dollar Gains, Jobs Data Shocks Markets
The Australian dollar strengthened against the US dollar on Thursday after the release of much stronger-than-expected Australian jobs data. The market believes this data could make the Reserve Bank of Australia (RBA) more cautious about cutting interest rates in the near future.
According to the ABS, employment rose by 65.2 thousand in December, reversing the downward revision from the previous month. The poverty rate fell to 4.1% from 4.3%. The ABS also noted that more 15–24 year olds entered the workforce, contributing to the increase in total employment.
This strong jobs data adds to the RBA's reason to remain vigilant about inflation. The IMF also urged the RBA to remain cautious because inflation has long been above its 2%–3% target, while the latest domestic inflation indicators show upward pressure.
However, the AUD's strength was not entirely smooth sailing, as the US dollar also strengthened. The dollar received support after news emerged that Trump had held back tariff threats against European countries over the Greenland issue, improving market sentiment and increasing demand for the USD.
On the other hand, expectations for a Fed interest rate cut have also receded due to continued solid US employment data—the market is now widely pricing the next rate cut around mid-year. The AUD's movement also remains sensitive to China (Australia's main trading partner): Chinese industrial production strengthened, but retail sales were weaker than expected—making the market a conduit for riskier assets. (asd)
Source: Newsmaker.id
