Strong labor market supports RBA – Commerzbank

The Australian dollar (AUD) rose slightly this morning in response to another strong Australian employment report, notes Commerzbank currency analyst Volkmar Baur.

Australia’s economic woes to set the stage for a weaker Australian

“After apparently cooling at the end of last year, the labor market has added jobs at a much faster pace in recent months. In July, another 58.2 thousand new jobs were created, almost three times the 2015-2019 average.”

“The unemployment rate rose slightly from 4.1% to 4.2%, but this appears to be entirely due to a higher participation rate. A separate survey also showed that consumer inflation expectations rose again in August to 4.5%, further ahead of the central bank’s target.”

“None of this points to an imminent rate cut by the central bank, which should support the AUD this year. Next year, we expect Australia’s economic problems to dominate and therefore a weaker Aussie.”