The number of jobs in Australia has fallen for the first time in a year, increasing market expectations for further rate cuts by the previously hawkish Reserve Bank of Australia (RBA).
The Australian labor market report came in significantly below expectations. In February, nearly 53,000 jobs were lost, while forecasts had predicted an increase of around 31,000. The negative impact of the data was softened by a stable unemployment rate (4.1%) and comments from the Australian Bureau of Statistics (ABS), which stated that the decline in employment was largely due to lower labor force participation, as some older workers exited the job market in February.
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Open account Try demo Download mobile app Download mobile appWhile there are no signs of real panic around the AUD, concerns over Donald Trump's tariffs have driven up expectations for further rate cuts, which could help shield the Australian economy from a downturn. The upcoming data will be particularly influenced by the tariffs on steel and aluminum imports to the U.S., introduced in early March—two of Australia’s most important export commodities.
Inflationary pressure has eased noticeably, with inflation falling from 2.8% to 2.5% in January. However, the market does not expect rate cuts at the next RBA meeting scheduled for April 1. Currently, there is a 77% probability of a rate cut in May, with the upcoming CPI reading being a key factor for these expectations. A full 25 basis point cut is priced in for July.
The Australian labor market report caused the AUD/USD exchange rate to retreat from key resistance around 0.64 to the level of the 30-day exponential moving average (0.63; light purple). Source: xStation5
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