Australia Employment Preview: Unemployment rate set to rise in December
- The Australian Unemployment Rate is forecast at 4.4% in December.
- Australia is expected to have added 30,000 jobs in the month, following the 21,300 decrease in November.
- AUD/USD is overbought in the near term, but higher highs remain on the table.
Australia will release the December monthly employment report on Thursday at 0:30 GMT, with market participants anticipating a modest recovery in labor market conditions. The Australian Bureau of Statistics (ABS) is expected to announce that the country added 30,000 new jobs in the month, while the Unemployment Rate is forecast at 4.4%, up from the 4.3% posted in November. The Participation Rate is seen at 66.8%, pretty much unchanged from the previous 66.7%.
The ABS reports both full-time and part-time positions through the monthly Employment Change. Generally speaking, full-time jobs entail working 38 hours or more per week, usually include additional benefits, and typically provide a consistent income. On the other hand, part-time employment generally means higher hourly rates but lacks consistency and benefits. That’s why the economy prefers full-time jobs. In November, Australia gained 35,200 part-time positions but lost a whopping 56,500 full-time positions.
Australian unemployment rate expected to tick higher in December
Financial markets, however, are not about macroeconomic data, but about United States (US) President Donald Trump’s decision. Risk aversion dominates financial boards amid escalating tensions between Trump and Europe over Greenland. The US President wants to take over the Danish territory, even offering to buy it. Trump claims the US needs it for better defense of its territory, but it is worth noting that Greenland is rich in rare-earth elements. Given Denmark's refusal to cede its territory, Trump threatened several Nordic countries with fresh tariffs, adding that they would increase them in time until a deal to buy Greenland is achieved.
He also threatened France with levies, though for a different reason: Trump proposed creating a Board of Peace, a US-led organization meant to “promote stability, restore dependable and lawful governance, and secure enduring peace in areas affected or threatened by conflict.” Countries that wish to join the organization must pay US$1 billion. French leader Emmanuel Macron has doubts about joining it, claiming that it is the North Atlantic Treaty Organization’s (NATO) role to work on peace. As a result, US President Trump threatened to impose tariffs of up to 200% on French wines and champagne.
As a result, Gold price skyrocketed to record levels amid a run to safety, which in turn, underpins demand for the Australian Dollar (AUD).
Meanwhile, the Reserve Bank of Australia (RBA) is scheduled to meet and announce its first monetary policy decision of the year on February 3. The central bank has left the Official Cash Rate (OCR) unchanged at 3.6% since reaching that level in August 2025, with the December statement indicating policymakers are concerned about both employment and inflation.
“Turning to considerations for the monetary policy decision, members highlighted three judgements that were central to their decision at this meeting: first, the extent to which aggregate demand exceeds potential supply, and the implications of this for the persistence of the recent pick-up in inflation; second, the outlook for growth in labour demand and economic activity; and, third, whether financial conditions were still restrictive.”
However, the latest Australian employment figures have been generally disappointing, hinting at a loosening labor market. In that sense, the RBA may find some relief, but inflation remains a concern: the country's annual inflation slowed to 3.4% in November 2025 from 3.8% in October, still above the RBA’s 2–3% target.
Considering this broader picture, the Australian monthly employment report is likely to provide additional legs to the Australian Dollar (AUD) against its American rival, particularly if the report comes in line with or better than expectations.
When will the Australian employment report be released and how could it affect AUD/USD?
The ABS December employment report will be released early on Thursday. As previously noted, the Australian economy is expected to have added 30,000 new jobs in the month, while the Unemployment Rate is forecast at 4.4%. Market participants will also be attentive to the breakdown of full-time and part-time positions.
Valeria Bednarik, Chief Analyst at FXStreet, notes: “The AUD/USD pair trades near its recent peak at levels that were last seen in October 2024, closing up to the 0.6800 mark ahead of the release of Australian employment data, boosted by persistent risk aversion. The pair may seem overbought in the near term, but there is no reason for the USD to strengthen, and hence, slides are likely to keep attracting buyers, as long as the dismal mood persists.”
Bednarik adds: “Relevant resistance comes at 0.6830, en route to the 0.6870 price zone. Gains beyond the latter are unlikely solely because of the employment report, although the pair could rally further if risk sentiment deteriorates. An AUD slide on a dismal employment report should lead to a slide towards the 0.6700 level, where buyers will likely reappear to add longs.”
Economic Indicator
Employment Change s.a.
The Employment Change released by the Australian Bureau of Statistics is a measure of the change in the number of employed people in Australia. The statistic is adjusted to remove the influence of seasonal trends. Generally speaking, a rise in Employment Change has positive implications for consumer spending, stimulates economic growth, and is bullish for the Australian Dollar (AUD). A low reading, on the other hand, is seen as bearish.
Read more.Next release: Thu Jan 22, 2026 00:30
Frequency: Monthly
Consensus: 30K
Previous: -21.3K
Source: Australian Bureau of Statistics
RBA FAQs
The Reserve Bank of Australia (RBA) sets interest rates and manages monetary policy for Australia. Decisions are made by a board of governors at 11 meetings a year and ad hoc emergency meetings as required. The RBA’s primary mandate is to maintain price stability, which means an inflation rate of 2-3%, but also “..to contribute to the stability of the currency, full employment, and the economic prosperity and welfare of the Australian people.” Its main tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will strengthen the Australian Dollar (AUD) and vice versa. Other RBA tools include quantitative easing and tightening.
While inflation had always traditionally been thought of as a negative factor for currencies since it lowers the value of money in general, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Moderately higher inflation now tends to lead central banks to put up their interest rates, which in turn has the effect of attracting more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in the case of Australia is the Aussie Dollar.
Macroeconomic data gauges the health of an economy and can have an impact on the value of its currency. Investors prefer to invest their capital in economies that are safe and growing rather than precarious and shrinking. Greater capital inflows increase the aggregate demand and value of the domestic currency. Classic indicators, such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can influence AUD. A strong economy may encourage the Reserve Bank of Australia to put up interest rates, also supporting AUD.
Quantitative Easing (QE) is a tool used in extreme situations when lowering interest rates is not enough to restore the flow of credit in the economy. QE is the process by which the Reserve Bank of Australia (RBA) prints Australian Dollars (AUD) for the purpose of buying assets – usually government or corporate bonds – from financial institutions, thereby providing them with much-needed liquidity. QE usually results in a weaker AUD.
Quantitative tightening (QT) is the reverse of QE. It is undertaken after QE when an economic recovery is underway and inflation starts rising. Whilst in QE the Reserve Bank of Australia (RBA) purchases government and corporate bonds from financial institutions to provide them with liquidity, in QT the RBA stops buying more assets, and stops reinvesting the principal maturing on the bonds it already holds. It would be positive (or bullish) for the Australian Dollar.
Author
FXStreet Team
FXStreet
