Australian Dollar Falls as Unemployment Hits 4-Year High

Australia’s unemployment rate rose to a four-year high of 4.5% in September, according to the latest Labour Force report from the Australian Bureau of Statistics (ABS). While still low by historical standards (the long-term average sits at 6.54%) the trend is clearly rising.

Unemployment has been steadily climbing from its record low over the past two years, but the pace now appears to be increasing. September’s 0.2-percentage-point increase was the second such rise in four months. Over the past 11 months, the rate has risen four times, held steady four times, and fallen only once in November last year.

View related analysis:

Australian Dollar Weakens as Traders Price In RBA Rate Cut

Chart analysis by Matt Simpson - data source: Australian Bureau of Statistic (ABS), LSEG

Employment Growth Remains Positive but Slows

Job growth was relatively weak at 14.9k, but still growing with 8.7k full-time jobs added to 6.2k part time. While August’s figures saw job growth revised lower to -11.k from -5.4k (and full-time to -48.k from -40.9k), this is backwards looking and not a huge increase from the original estimates.

Chart analysis by Matt Simpson - data source: Australian Bureau of Statistic (ABS), LSEG

RBA Rate Cut Speculation Builds — But It’s Not a “Slam Dunk”

While this has renewed some market excitement about a potential RBA rate cut, I don’t think it makes it a slam dunk. The participation rate ticked up by 0.1 percentage point to 69%, not far from its record high. The employment-to-population ratio held steady at 64%, and 14.9k jobs were added overall — with full-time employment up 8.7k and part-time up 6.2k. These figures aren’t exactly screaming “recession,” even though unemployment is rising.

RBA Minutes Highlight Ongoing Inflation Risks

The RBA minutes were slightly more hawkish, noting that household consumption and growth have been stronger than expected. Policymakers described the labour market as still “tight.” Even if today’s data suggest it’s slightly less so, the employment sector has hardly collapsed. Perhaps more importantly, the minutes also stated that “recent data suggested that inflation in the September quarter may be higher than had been expected in the August Statement on Monetary Policy.”

RBA Likely to Wait for CPI Before Considering Rate Cuts

Ultimately, I do not see the RBA cutting rates without first seeing the next quarterly CPI figures — particularly while they remain on guard for higher-than-expected inflation, stronger growth, and resilient consumption, even as unemployment edges higher.

AUD/NZD Leads Losses as Australian Dollar Slumps

The Australian dollar is the weakest currency of the day, with bears toying with the idea of an RBA rate cut in December. AUD/USD is the weakest major pair, currently down 0.4%, while AUD/JPY fell as much as 0.8% before recovering some losses. AUD/NZD is the weakest Australian dollar cross, down 0.7% on the day, and has also been the most volatile — trading within a high-to-low range equal to 128% of its 10-day ATR.

Chart analysis by Matt Simpson – data source: LSEG.

AUD/NZD Technical Analysis: Australian Dollar vs New Zealand Dollar

The weekly chart shows that the strong rally from the May low has come to a halt, with a shooting star and bearish pinbar hinting at a retracement. Today’s news flow has worked against the Australian dollar, sending AUD/NZD to a three-week low.

The daily chart suggests a head and shoulders top pattern has formed, projecting a downside target near the 38.2% Fibonacci retracement, around 1.1140. Unless a swift rebound occurs, AUD/NZD is on track for a bearish engulfing or outside day.

Bears may look to fade into rallies within today’s range and maintain a near-term bearish bias while prices remain beneath 1.14. Note that the 2024 high, monthly S1 pivot, and 50-day EMA converge around 1.1180, creating a potential support zone ahead of the H&S downside target.

Chart analysis by Matt Simpson - Source: LSEG

View the full economic calendar

-- Written by Matt Simpson

Follow Matt on Twitter @cLeverEdge

How to trade with City Index

You can trade with City Index by following these four easy steps:

Open an account, or log in if you’re already a customer

• Open an account in the UK
• Open an account in Australia
• Open an account in Singapore
Search for the market you want to trade in our award-winning platform
Choose your position and size, and your stop and limit levels
Place the trade

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.

Delayed London Stock Exchange (LSE) Data

The London Stock Exchange (LSE) market data displayed or referenced on this website is provided on a delayed basis and is not in real time. The delay period may vary but is typically at least 15 minutes. This data is intended for information purposes only and should not be relied upon for trading, investment, or other financial decisions. We do not guarantee the completeness, reliability, or suitability of the data for any particular purpose. Users should consult real-time data sources and obtain professional advice before making any financial decisions.