Aussie loses ground after dismal labor data

The Australian dollar fell in Asian trade on Thursday against the US dollar, approaching a two-week trough after weak Australian labor data.

The data reduced the pressure on the Reserve Bank of Australia and boosted the odds of a rate cut in July.

The Price

The AUD/USD price fell 0.45% today to 0.6476, with a session-high at 0.6512.

The Aussie rose 0.5% on Wednesday against its US counterpart as risk appetite rebounded in the global markets. 

Australian Data

Australia’s unemployment rate was unchanged at 4.1% in May as expected, same as the previous reading. 

Australia’s economy lost 2.5 thousand jobs in May, missing estimates of the addition of 20.6 thousand new  jobs, while the previous reading was revised downward to show the addition of 89.0 thousand jobs instead of 87.6 thousand. 

The data will likely prompt the RBA to accelerate the pacing of interest rate cuts in future months.

Australian Rates

Following the labor data, markets now expect 70  basis points of Australian rate cuts by the end of the year.

The odds of an RBA 0.25% rate cut in July rose from 55% to 65%.

The RBA reduced interest rates twice since February to 3.85%, as inflation settled into the 2-3% target range.