The Australian dollar traded broadly higher against a basket of major currencies during Thursday's Asian session, resuming gains against its US counterpart after a two-day pause and moving closer to its highest level in five weeks following the release of stronger-than-expected Australian labor market data.

The figures highlighted the resilience of the Australian economy and pointed to increasingly tight labor market conditions, reinforcing market expectations that the Reserve Bank of Australia (RBA) may deliver another interest rate hike later this year.

The Price

• The Australian dollar rose 0.35% against the US dollar to 0.7021, up from the day's opening level of 0.6996, after touching an intraday low of 0.6987.

• On Wednesday, the Australian dollar closed down by less than 0.1% against the US dollar, marking its second consecutive daily decline as traders continued profit-taking and corrective selling after the currency reached a five-week high of US$0.7027.

Australian labor market

Data released by the Australian Bureau of Statistics on Thursday showed net employment increased by 76,300 jobs in June, the strongest monthly gain since April 2025. The reading far exceeded market expectations for an increase of 16,400 jobs. Meanwhile, May's figure was revised higher to a gain of 44,000 jobs from the previously reported 40,300.

The Australian economy adds jobs at the fastest pace in 14 months.

Government data also showed the unemployment rate held steady at 4.4% in June, matching market expectations and unchanged from May.

Australia's unemployment rate remains in line with expectations in June.

The latest data indicates that tight labor market conditions continue to strengthen, increasing pressure on policymakers at the Reserve Bank of Australia and reinforcing expectations of another interest rate hike later this year.

Australian interest rates

• Following the release of the data, market pricing for a 25-basis-point interest rate hike by the Reserve Bank of Australia in August rose to above 35%.

• Pricing for a 25-basis-point rate hike before the end of the year climbed from 78% to 97%.

• Investors will now look for additional inflation and wage data from Australia to further refine interest rate expectations.

Australian dollar outlook

We expect the Australian dollar to remain in positive territory against the US dollar, with the potential to post fresh five-week highs, supported by continued demand for the currency as one of the more attractive opportunities in the foreign exchange market.

Australia's employment report released on Thursday showed the economy added 76,300 jobs in June, marking the strongest monthly gain since April 2025. The figure came in well above market expectations of 16,400 new jobs. Meanwhile, May's reading was revised higher to 44,000 jobs from a previously reported 40,300.

The report points to a sharp acceleration in Australia's labor market, renewing pressure on the Reserve Bank of Australia and strengthening expectations of further Australian interest rate hikes later this year.

Economic Outlook

• Surprise Factor: Yes

• Assessment: Positive for the Australian dollar

• Market Impact: Strong

• Interest Rate Outlook: Supports maintaining monetary policy normalization

• Immediate Market Reaction: Positive

XRP maintained a broadly positive performance during Wednesday's trading despite ongoing pressure on the cryptocurrency market from escalating geopolitical tensions between the United States and Iran in the Middle East.

During the session, XRP slipped about 0.5%, in line with a broader decline across the digital asset market.

Middle East tensions weigh on market sentiment

Doubts over the success of diplomatic efforts to resolve the crisis intensified after US Secretary of State Marco Rubio said Tehran is "not serious" about reaching an agreement to end the fighting.

Speaking during the ASEAN Foreign Ministers' Meeting in the Philippines, Rubio said the United States remains prepared to pursue a diplomatic solution to end the conflict.

"The United States wants a diplomatic settlement, and we want to reach an agreement with Iran if that is possible," Rubio said. "But the Iranians do not appear to be serious about reaching a deal."

He added that Tehran had made commitments under the memorandum of understanding reached last month but violated them within just two weeks.

Rubio also said US forces will continue protecting navigation through the Strait of Hormuz, adding: "We will continue to protect shipping, and we believe other countries should join us in that effort."

He noted that President Trump has a range of options available if Iran continues to reject cooperation.

Meanwhile, the Iran-aligned Houthi movement in Yemen announced a ban on vessels loading or unloading cargo at Saudi ports, threatening Saudi oil exports, some of which have been rerouted through the Red Sea to offset reduced shipments passing through the Strait of Hormuz.

In a further escalation, President Donald Trump threatened to bomb bridges and power stations inside Iran if Tehran targets ships transiting the Strait of Hormuz.

In a post on Truth Social, Trump said: "Effective immediately, if the Islamic Republic of Iran fires any missile, drone, or any other weapon at a ship in the Strait of Hormuz, the United States will bomb and destroy a bridge or power station, including those located near the capital, Tehran."

At the same time, the US Central Command (CENTCOM) announced that American forces had carried out an eleventh consecutive night of strikes against targets inside Iran.

According to the US military, the attacks targeted military operations centers, naval capabilities, aircraft shelters, drone storage facilities, and military logistics infrastructure.

Strong inflows support the bullish outlook

Despite the modest decline, derivatives market data continued to point to improving interest in XRP. Open interest in perpetual futures contracts rose to an average of 2.23 billion XRP on Wednesday, up from 2.17 billion XRP a day earlier, after easing from 2.37 billion XRP recorded on Monday.

The figures suggest that the recent wave of profit-taking has done little to dampen investor appetite for XRP futures.

Trading activity also remained strong, with daily trading volume climbing to $2.40 billion on Wednesday from $2.12 billion the previous day.

Analysts said the combination of rising trading volumes and higher open interest indicates continued capital inflows into XRP, reinforcing a constructive short-term outlook despite the uncertainty created by ongoing geopolitical developments.

Oil prices climbed during Wednesday's trading after US President Donald Trump threatened to bomb bridges and power stations inside Iran.

In the market, Brent crude futures, the global benchmark, rose more than 3% to settle at $94.07 per barrel, while US West Texas Intermediate (WTI) crude futures gained around 3% to close at $86.83 per barrel.

Oil prices have now surged more than 20% since the start of the month as the military confrontation between the United States and Iran continues to escalate.

Rubio fuels pessimism

Doubts over the success of diplomatic efforts to resolve the crisis intensified after US Secretary of State Marco Rubio said Tehran is "not serious" about reaching an agreement to end the fighting.

Speaking during the ASEAN Foreign Ministers' Meeting in the Philippines, Rubio said the United States remains prepared to pursue a diplomatic solution to end the conflict.

"The United States wants a diplomatic settlement, and we want to reach an agreement with Iran if that is possible," Rubio said. "But the Iranians do not appear to be serious about reaching a deal."

He added that Tehran had made commitments under the memorandum of understanding reached last month but violated them within just two weeks.

Rubio also said US forces will continue protecting navigation through the Strait of Hormuz, adding: "We will continue to protect shipping, and we believe other countries should join us in that effort."

He noted that President Trump has a range of options available if Iran continues to reject cooperation.

Meanwhile, the Iran-aligned Houthi movement in Yemen announced a ban on vessels loading or unloading cargo at Saudi ports, threatening Saudi oil exports, some of which have been rerouted through the Red Sea to offset reduced shipments passing through the Strait of Hormuz.

Trump threatens strikes on bridges and power stations

In a further escalation, President Donald Trump threatened to bomb bridges and power stations inside Iran if Tehran targets ships transiting the Strait of Hormuz.

In a post on Truth Social, Trump said: "Effective immediately, if the Islamic Republic of Iran fires any missile, drone, or any other weapon at a ship in the Strait of Hormuz, the United States will bomb and destroy a bridge or power station, including those located near the capital, Tehran."

At the same time, the US Central Command (CENTCOM) announced that American forces had carried out an eleventh consecutive night of strikes against targets inside Iran.

According to the US military, the attacks targeted military operations centers, naval capabilities, aircraft shelters, drone storage facilities, and military logistics infrastructure.