Australia Unemployment Rate set to remain at a five-year high of 4.6% in September

The Australian Bureau of ​Statistics (ABS) will publish the September employment report on Thursday at 00:30 GMT.

The Australian Dollar (AUD) could see a big reaction to the jobs data if the numbers significantly alter market expectations for another interest rate hike by the Reserve Bank of Australia (RBA) later this year.

What to expect from the Australian Unemployment Rate?

The Australian economy is expected to have added 20,000 jobs in September. Net employment rose by 39,500 in August, rebounding from a July decline of 15,900.

Meanwhile, the Unemployment Rate is expected to remain at a five-year high of 4.6% in the same period. Details of the report are likely to show that the Participation Rate ticked a tad lower to 67% from 67.1% prior.

Market participants will also watch the breakdown of full-time and part-time positions. 

A potential weakness in the labor market and a slowdown in wage growth are unlikely to temper bets for at least one more rate hike this year. Markets are currently pricing in about a 33% chance that the RBA will raise rates in November, according to the Australian Securities Exchange (ASX) RBA Rate Tracker. 

The Australian central bank raised interest rates for the fourth time this year in September to a 15-year high of 4.6%, and flagged further tightening, if needed.

On the labor market, the RBA said that its “conditions have eased broadly as expected in recent months, and labour market leading indicators are broadly stable.”

RBA Governor Michele Bullock, during her post-monetary policy meeting press conference, emphasized that “unemployment rate still low historically,” adding that she still thinks “the labor market is a little bit tight.”

Soon after the September policy decision, the Australian Consumer Price Index (CPI) data was published, showing that the trimmed mean measure of core inflation increased by 0.2% month-on-month in August, ​leaving the annual pace steady at 3.6% for a third consecutive month.

With inflation showing no signs of easing, despite a run of rate increases this year, further tightening remains on the table unless the labour market weakens significantly.

How could the Australian employment report affect AUD/USD?

An unexpected dip in the Unemployment Rate alongside stronger-than-expected job gains could boost November RBA rate-hike bets, provide the much-needed impetus to the currency and strengthen the AUD/USD recovery beyond the 0.7000 level.

Conversely, a surprise rise in unemployment, combined with weaker job growth, could prompt markets to price out a November interest rate increase, weighing heavily on the Aussie.

Dhwani Mehta, Asian Session Lead Analyst at FXStreet, highlights key technical levels for trading AUD/USD following the labor data:

“AUD/USD keeps a bearish near-term tone as spot holds beneath a dense cluster of moving averages. The 21-day Simple Moving Average (SMA) at 0.7013 is the first cap just overhead, while the 100-day and 200-day SMAs at 0.7044 and 0.7042, respectively, reinforce a broader topside barrier, with the 50-day SMA further up at 0.7086. The Relative Strength Index (14) around 47 has recovered from oversold territory but still hints at only modest momentum, suggesting that bounces are likely to be limited while price remains under these key trend markers.”

“On the downside, with no clear moving-average or structural supports defined by the provided dataset, traders will likely look to recent lows near 0.6950 and the psychological 0.6900 mark as potential demand zones.”