AUD/USD overnight ATM volatility (implied volatility) has increased from 4.85% to 8.5% ahead of the all-important Aussie jobs data.
The data due at 01:30 GMT today is expected to show the jobless rate remained steady at 5.2% and the economy added 10K jobs in June, far less than the 42.3 jobs additions seen in May.
The spike in overnight volatility indicates the investors are expecting big moves in the Aussie dollar following the release of the monthly jobs data. After all, the Reserve Bank of Australia has pledged to adjust monetary policy to absorb the spare capacity in the labor market.
A weaker-than-expected data will likely put pressure on the RBA to cut rates next month. The central bank has cut rates in May and June and markets are anticipating another rate cut before the year-end.
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