Australia dollar skids as jobless jump stokes rate cut pressure
Employment rose by just 2,000 in June, when analysts had looked for a gain of 20,000, while unemployment climbed to 4.3%, from 4.1%, breaking a long run of stable readings.
The jobless rate had held between 3.9% and 4.2% since late 2023 even as the broader economy slowed, a surprising resilience that gave the Reserve Bank of Australia scope to hold rates at 3.85% this month to await more data on inflation.
The Aussie quickly fell 0.7% to $0.6487 in reaction as markets lifted the already elevated chance of a quarter-point move in August to around 90%.
The implied floor for rates also dipped to 3.05%, from 3.12% ahead of the jobs figures.
'The upshot is that the RBA is almost certain to cut rates by 25bp at its meeting in August,' said Abhijit Surya, a senior APAC economist at Capital Economics.
'In fact, a larger 50bp cut could be on the table again if inflation data due by the month end confirm that inflationary pressures remain benign.'
The consumer price report for the June quarter is out on July 30 and analysts had already assumed a manageable rise of 0.6% to 0.7% in core inflation would open the door to a cut.
The likelihood of lower cash rates saw three-year bond futures jump 8 ticks to 96.570, and away from a two-month low of 96.45 hit the previous session. Yields on 10-year bonds dipped 4 basis points to 4.354%.
The kiwi dollar eased in sympathy to $0.5925, having been as low as $0.5914 overnight. Support lies around $0.5884, with resistance at $0.5980. New Zealand data showed a sharp 1.2% jump in food prices in June which lifted annual growth to 4.6%.
Prices for butter alone were up almost 47% on the year.
Satish Ranchhod, a senior economist at Westpac, said the overall CPI could pick up to 2.8% in the June quarter, from 2.5% the previous quarter and above the Reserve Bank of New Zealand's forecast of 2.6%.
The central bank paused its rate cuts this month to await the full inflation report, but indicated further easing was likely given the amount of spare capacity in the economy.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Recorder
2 hours ago
- Business Recorder
Australian HC calls on Punjab Assembly speaker
LAHORE: Australian High Commissioner to Pakistan, Neil Hawkins, called on Speaker Punjab Assembly, Malik Muhammad Ahmad Khan, at the Speaker's Chamber. Ms George Nonnenmacher, Head of Domestic Political Affairs at the Australian High Commission, was also present during the meeting. The meeting included a detailed discussion on enhancing bilateral relations between the two countries, particularly in the fields of health, education, agriculture, culture, information technology, and tourism, as well as cooperation in exchange of parliamentary delegations. Speaker Malik Muhammad Ahmad Khan stated that Pakistan holds its friendly ties with Australia in high regard, and that it is essential to further enhance parliamentary relations and economic cooperation between the two countries. He further said that there are ample investment opportunities for Australian investors in the fields of IT and tourism in Punjab, and the Government of Punjab will provide all possible support for investment promotion in these sectors. Welcoming Australia's cooperation in the sectors of education and health, the Speaker emphasized the need to further strengthen collaboration in these fields. He also briefed the Australian High Commissioner about the legislative process in the Punjab Assembly, recent amendments in the Rules of Procedure, and the effective role of the standing committees. He said that the committees have been made more functional and transparent to improve the overall performance of the Assembly, making the legislative process more purposeful and people-oriented. Australian High Commissioner Neil Hawkins stated that Australia considers Pakistan a trusted friend and an important economic partner. He mentioned that Australian investors are keen to invest in Pakistan, and every possible measure will be taken to enhance cooperation with the Government of Punjab in various sectors. He reaffirmed Australia's support for a stable, democratic, and prosperous Pakistan. Secretary General Chaudhry Amer Habib and Principal Secretary to the Speaker, Imad Hussain Bhalli, were also present during the meeting. Copyright Business Recorder, 2025
Business Recorder
2 hours ago
- Business Recorder
Dollar holds losses on US economy concerns, Fed appointments
TOKYO: The dollar remained lower against major peers on Thursday, as expectations of Federal Reserve rate cuts grew and concerns swirled about partisanship creeping into key U.S. institutions. Initial jobless claims in the United States are under scrutiny after last week's disappointing nonfarm payrolls, which triggered a slide in the greenback. Meanwhile, the euro found support ahead of anticipated talks next week to end the war between Russia and Ukraine. Last week, President Donald Trump fired the official responsible for the labour data he did not like, and focus is centring on his nomination to fill a coming vacancy on the Fed's Board of Governors and candidates for the next chair of the central bank. 'All those things suggest that we're seeing those political risks around the U.S. dollar increase, and on top of that you've got the weak data coming through,' said Tony Sycamore, a market analyst at IG. Any progress in ending the war in Ukraine 'is going to be a positive driver of the euro,' he added. The dollar index , which measures the greenback against a basket of major peers, edged up 0.1% to 98.259 in early trade in Asia, after a 0.6% slide in the previous session. The U.S. currency was little changed at 147.36 yen . The euro stood at $1.1654 , down almost 0.1% after a 0.7% jump previously. The U.S. Labor Department is expected to report that initial claims for unemployment benefits likely rose by 3,000 to 221,000 for the week ended August 2. Continued jobless claims for the week that ended July 26 are expected to increase slightly. Data last Friday showed U.S. employment growth was weaker than expected in July while the nonfarm payrolls count for the prior two months was revised down considerably, suggesting a sharp deterioration in labour market conditions. Fed funds futures traders are now pricing in a 94% probability of a 25 basis point cut at the Fed's September meeting, up from 48% a week ago, according to the CME Group's FedWatch Tool. In total, traders see 60.5 basis points in cuts this year. Trump could meet Russian leader Vladimir Putin as soon as next week, a White House official said on Wednesday, as the U.S. kept up pressure on Moscow to end the war in Ukraine. The president said on Tuesday he would decide on a nominee to replace outgoing Fed Governor Adriana Kugler by the end of the week and had separately narrowed the possible replacements for Fed Chair Jerome Powell to a short list of four. Sterling was steady at $1.33505 . The Australian dollar was little changed at $0.65 . Bitcoin edged 0.1% lower to $115,038.79.
Business Recorder
a day ago
- Business Recorder
Thailand records another negative inflation reading in July
BANGKOK: Thailand's annual inflation rate was negative for a fourth straight month in July, driven by price drops in energy and some agricultural goods, but the commerce ministry said on Wednesday that the economy was not suffering from deflation. The consumer price index dropped 0.7% in July from a year earlier, deeper than the 0.40% decline forecast in a Reuters poll, and followed a 0.25% drop in June. It was the fifth month in a row that the inflation rate was below the central bank's target range of 1.0% to 3.0%. 'The deeper fall was driven by two main factors - energy prices like gasoline, diesel and electricity prices, while the other was fresh produce,' Poonpong Naiyanapakorn, head of the ministry's Trade Policy and Strategy Office, told a news conference. The August rate is expected to be similar to July, he said, with the CPI seen down an annual 0.5% in the third quarter. Despite the run of negative readings, the ministry said there were no signs of deflation. 'On deflation, we must look at demand. The negative inflation rate has been driven by factors that are not demand-related but rather by the price of oil, energy, fruits and vegetables,' Poonpong said. 'Core inflation remains elevated and has consistently risen,' he added. The core CPI, which excludes volatile fresh food and energy prices, rose 0.84% in July from a year earlier, compared with a forecast increase of 0.90%. When asked whether the price readings would affect the central bank's upcoming review of interest rates, Poonpong said inflation was only one aspect that was considered and potential deflation required an examination of demand. The Bank of Thailand's next review is on August 13. In June, the central bank left its key interest rate unchanged at 1.75%, seeking to save some policy ammunition to support growth if needed In the first seven months of 2025, annual headline inflation averaged 0.21%, with core inflation at 0.95%, the ministry said. The ministry maintained its headline inflation forecast for 2025 at 0.0% to 1.0%.
