19.02.202602:11:37UTC+00Aussie Dollar Rises on Strong Jobs Data

The Australian dollar strengthened to around $0.706 on Thursday, hovering near a three-year high, as investors increased bets on a follow-up interest rate hike in May after January labor market data underscored continued resilience. The unemployment rate held steady at a seven-month low of 4.1%, while employment grew by 17,800, with all the gains coming from full-time positions.

The robust figures supported the Reserve Bank of Australia’s view that labor market conditions remain tight and led markets to assign a higher probability to a May rate move. Traders now see about a 77% chance of a 25-basis-point hike to 4.10%, up from 70% before the data release. A rate increase is almost fully priced in by July, with markets implying 39 basis points of additional tightening by 2026, even though most economists still expect no change at the March meeting.

The latest data also helped extend the Australian dollar’s year-to-date advance to more than 5.5%, cementing its status as the second-best-performing currency among the Group of Ten.