The Australian Dollar (AUD) maintained its gains against the US Dollar (USD) despite the release of a softer-than-expected July labor force report, according to Brown Brothers Harriman’s (BBH) Elias Haddad [1]. The Australian economy unexpectedly lost 15,800 jobs in July, compared to market expectations of a 12,000 job increase and a gain of 80,200 jobs in June. The decline was primarily driven by a drop in part-time employment, which fell by 32,200 compared to a 31,400 increase in June [1].
On a more positive note, full-time employment rose by 16,300 in July, and the previous month’s gain was revised up by 20,000 to 48,900. However, the unemployment rate increased by 0.1 percentage points to 4.5%, slightly above the consensus forecast of 4.4%, despite a lower participation rate. Additionally, hours worked fell by 0.6% month-on-month, indicating weaker labor demand rather than an increase in labor supply [1].
The continued easing in labor market conditions supports the case for the Reserve Bank of Australia (RBA) to remain on hold for the foreseeable future. Nevertheless, BBH’s Haddad notes that Australia’s attractive carry and strategic exposure to commodities linked to energy, artificial intelligence, and defense continue to provide key tailwinds for the AUD [1].
CONCLUSION
Despite weaker-than-expected labor data, the Australian Dollar has held its ground due to broader US Dollar weakness and ongoing support from attractive carry and commodity exposure. The data reinforces expectations that the RBA will keep rates unchanged in the near term.