Labor market easing similar to past mild recessions

Reserve Bank of Australia (RBA) Deputy Governor (Economics) Sarah Hunter made several comments during the Asian session on Wednesday, saying high rates were slowing demand in what should be a mild economic downturn.

Key quotes:

• The labor market is still tight relative to full employment.
• The labor market has moved towards better balance since late 2022.
• Labor market easing similar to past mild recessions.
• Some slowdown in labor demand will occur through a decrease in average hours.
• Expect employment to continue to grow, but at a slower rate than population.
• Vacancies to fall further without a sharp rise in unemployment.
• Surprised by the strength of the participation rate, including similar savings.
• The outlook is highly uncertain and our predictions are likely to be wrong in some way.
• There were signs that the slack in the labor market was beginning to translate into wage growth, which had likely peaked and was set to slow further.

Market reaction:

AUD/USD is moving little and remains capped at the mid-0.6600s or 100-day SMA as traders eagerly await the release of the US Consumer Price Index (CPI) report before placing directional bets.