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.
Australian economy loses jobs unexpectedly in May
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.
US dollar edges up after Fed's decision
The US dollar rose against most major rivals following the Federal Reserve’s policy decision earlier today.
The Federal Open Market Committee voted to hold interest rates unchanged at below 4.5% as expected by analysts.
The FOMC expects two 0.25% interest rate cuts by the end of 2025, while reducing expected future cuts in both 2026 and 2027 by once each.
The statement showed persistent uncertainty among Fed officials on the future of interest rates, but overall, the Fed expects rates to reach 3.4% by 2027.
The Fed has adjusted GDP growth in 2025 to 1.4%, while raising inflation forecasts to 3%.
It raised its unemployment estimates by 0.1% to 4.5% this year.
US President Donald Trump once again attacked Fed Chair Jerome Powell and called him stupid for refusing to cut rates, and said interest rates should be lower by 2% at least.
Earlier data showed US unemployment claims fell 5 thousand last week to 245 housand as expected by analysts.
Markets are also analyzing the developing conflict between Iran and Israel and mutual threats, with US President Trump threatening to intervene.
Otherwise, the dollar index rose 0.2% as of 20:11 GMT to 98.9, with a session-high at 99.01, and a low at 98.4.
Loonie
The Canadian dollar fell 0.2% against its US counterpart as of 21:09 GMT to 0.73.
Bank of Canada Governor Tev Maclam said the upcoming US-Canada trade deal could pave the way to remove tariffs, but warned that persistent tariffs will boost inflation.
Aussie
The Australian dollar rose 0.5% as of 21:09 GMT to $0.6506.