FX.co ★ Aussie Dollar Firms Ahead of Jobs Data

The Australian dollar strengthened to approximately $0.653 on Wednesday, reversing a three-day decline, as investors shifted their focus to Thursday's labor market data. This data could offer new insights into the short-term policy landscape. Recently, the Reserve Bank of Australia has taken a cautious and data-driven approach, highlighting a more balanced inflation outlook alongside continued strength in the labor market. A strong jobs report could challenge the current market assumption, which places an 80% probability on a rate cut at the next meeting. Market expectations are currently anticipating an addition of 20,000 jobs in June with the unemployment rate remaining steady at 4.1%. Simultaneously, unexpectedly high US inflation figures for June have reduced expectations for a Federal Reserve rate cut in September and reignited concerns about increased import tariffs, thereby limiting potential gains for the risk-sensitive Australian dollar. In terms of trade, President Trump has reduced tariffs on Indonesian goods to 19% in return for significant purchase commitments while cautioning that tariffs exceeding 10% could be imposed on smaller nations.