FX.co ★ Aussie Dollar Pulls Back on Soft Jobs Data

On Thursday, the value of the Australian dollar dipped below $0.650, retreating from gains made the day before. This decline followed the release of labor data that fell short of expectations, heightening the likelihood of an interest rate cut by the Reserve Bank of Australia (RBA) in August. According to the Australian Bureau of Statistics, the unemployment rate climbed to 4.3% in June, surpassing the anticipated 4.1% and disrupting a five-month period of stability. Additionally, employment numbers rose by a mere 2,000, significantly below the projected increase of 20,000 jobs. This underwhelming labor market performance underscores signs of a slowing economy and supports the case for policy easing. Consequently, markets are currently anticipating an 89% probability of a 25-basis-point rate cut at the RBA’s upcoming August meeting, as policymakers deliberate the implications of rising unemployment juxtaposed with weak inflation. Contributing further to the dollar’s decline, demand for US assets grew following an increase in Treasury yields. However, concerns about the independence of the Federal Reserve capped the US dollar’s advance. President Trump subsequently alleviated some market worries by downplaying the possibility of dismissing Fed Chair Powell.