AUD: Cooling off or taking a breather? – Commerzbank

The Australian labour market appears to be cooling somewhat, which could give the Reserve Bank of Australia room to cut key interest rates again in August, Commerzbank's FX analyst Volkmar Baur notes.

Australia jobs data points to August RBA cut

"With just 2,000 jobs added, the labour market fell short of analysts' expectations. And after just over 1,000 jobs were cut last month, there has been virtually no job growth in the last two months. To be fair, it must be said that April saw an extremely strong labour market, so this could still be a pause for breath. However, the unemployment rate also rose to 4.3%, its highest level in almost four years, although this was supported by a slight increase in the participation rate."

"It is therefore too early to say whether this is really the beginning of a slowdown in the labour market or whether it is just another breather before another strong labour market report. However, I suspect that it should be enough to make the RBA's decision to cut interest rates in just under four weeks' time in August a little easier. The market has fully priced in this move, so the AUD should not be negatively affected."