24.09.202602:19:05UTC+00Australian Dollar Hits 7-Week Low

The Australian dollar weakened to around $0.70, a seven-week low, as investors parsed mixed labor-market data for clues on the policy outlook. The unemployment rate edged up to 4.6%, above expectations for an unchanged 4.5% and the highest level since late 2021, even as the economy added 39,500 jobs, nearly double the forecast 20,000 gain.

As the final major data release before the Reserve Bank’s September 28–29 meeting, the report pointed to emerging signs of cooling in a labor market the central bank has characterized as still “a bit tight,” potentially easing domestic inflation pressures. Markets now assign an 86% probability to a 25 bp rate increase to 4.60% in September, down from 95% before the jobs data, while the implied odds of an additional hike in November have slipped to 44%.

Externally, a stronger US dollar added to the downward pressure on the Australian currency, as better-than-expected US economic data bolstered expectations of further Federal Reserve rate hikes. Rising oil prices also dampened global risk sentiment after Iran cast doubt on progress in ongoing peace talks.