Australia’s Unemployment Rate rises to 4.2% in July vs. 4.1% expected

Lallalit Srijandorn FXStreet

Australia’s Unemployment Rate rose to 4.2% in July, compared with the expectations and the previous figure of 4.1%, according to the official data released by the Australian Bureau of Statistics (ABS) on Thursday.

Furthermore, the Australian Employment Change arrived at 58.2K in July from 50.2K in June, compared with the consensus forecast of 20.0K.

The participation rate in Australia increased to 67.1% in July, compared to 66.9% in June. Meanwhile, Full-Time Employment increased by 60.5K in the same period from 43.3K in the previous reading. The Part-Time Employment decreased by 2.3K in July versus 6.8K prior.

AUD/USD reaction to the Australia Employment report

The Australian Dollar edges higher in an immediate reaction to the mixed Australia Employment report. The AUD/USD pair is trading at 0.6595, down 0.06% on the day.

Employment FAQs

How do employment levels affect currencies?

Labor market conditions are a key element in assessing the health of an economy and thus a key driver for currency valuation. High employment, or low unemployment, has positive implications for consumer spending and economic growth, boosting the value of the local currency. Moreover, a very tight labor market – a situation in which there is a shortage of workers to fill open positions – can also have implications on inflation levels because low labor supply and high demand leads to higher wages.

Why is wage growth important?

The pace at which salaries are growing in an economy is key for policymakers. High wage growth means that households have more money to spend, usually leading to price increases in consumer goods. In contrast to more volatile sources of inflation such as energy prices, wage growth is seen as a key component of underlying and persisting inflation as salary increases are unlikely to be undone. Central banks around the world pay close attention to wage growth data when deciding on monetary policy.

How much do central banks care about employment?

The weight that each central bank assigns to labor market conditions depends on its objectives. Some central banks explicitly have mandates related to the labor market beyond controlling inflation levels. The US Federal Reserve (Fed), for example, has the dual mandate of promoting maximum employment and stable prices. Meanwhile, the European Central Bank’s (ECB) sole mandate is to keep inflation under control. Still, and despite whatever mandates they have, labor market conditions are an important factor for policymakers given their significance as a gauge of the health of the economy and their direct relationship to inflation.

Author

Lallalit Srijandorn

FXStreet

Lallalit Srijandorn is a Parisian at heart. She has lived in France since 2019 and now becomes a digital entrepreneur based in Paris and Bangkok.

160.80: Japanese Yen remains close to nearly two-year lows

USD/JPY inches lower after four days of gains, trading around 160.60 during the Asian hours. The USD/JPY pair surged to 160.80 the previous day, marking its highest level since July 2024 and significantly heightening speculation that Japanese authorities could soon intervene to support the struggling Yen.

Australian Dollar remains in positive territory after paring recent gains

AUD/USD pares its daily gains, remaining in the positive territory and trading around 0.7010 during the European hours. The pair appreciated as the Australian Dollar received support from prevailing hawkish sentiment surrounding the Reserve Bank of Australia’s policy outlook.

Gold retreats below $4,300 as USD benefits from hawkish Fed

Gold (XAU/USD) stays on the back foot in the European session and trades below $4,300. Although easing tensions in the Middle East help XAU/USD limit its losses, the broad-based USD strength in the Fed aftermath causes bulls to turn hesitant.

Bitcoin slips below $64,000 as hawkish Fed stance weighs on risk appetite

Bitcoin remains under pressure, extending its correction, trading below $64,000. The US Federal Reserve left interest rates unchanged but struck a hawkish tone on Wednesday, dampening the risk sentiment.

Bank Indonesia increases rates by 25 basis points in June: Will it defend the Rupiah?

Bank Indonesia decided to hike the benchmark interest rate by 25 basis points to 5.75% on June 18, from the previous 5.5%. The decision aligned with the market expectations. The Indonesian Rupiah receives support against the US Dollar as an immediate reaction to the BI interest rate decision. The USD/IDR is trading around 17,820.

Regime change: Inside Kevin Warsh's first move to make the Fed unreadable on purpose

The rate did not move. That was the least interesting thing about Kevin Warsh's first meeting in charge of the Fed. The FOMC held its benchmark at 3.50%-3.75% for the fourth straight meeting, exactly as priced, and then the new chair used his first press conference to dismantle the machinery the market has leaned on for a decade.