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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.
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AUD/USD: Sudden unemployment slide casts doubt on need for RBA rate cuts

Article By: ,  Market Analyst
Today 1:45 AM
  • Australian unemployment declines to 3.9%
  • Cyclical areas of labour market hint unemployment has peaked
  • February RBA rate cut back to a coin toss
  • AUD/USD price action, momentum turning more positive

Overview

Australian unemployment may have peaked, casting doubt on the need for the RBA to cut interest rates anytime soon, especially with underlying inflation still well above its target. The Australian dollar is flying in the wake of the November employment report as traders pare expectations on the probability of a rate cut in February.

Dovish RBA bets take a beating

Source: ABS

Unemployment declined unexpectedly to 3.9%, down sharply from 4.1% in October. Markets were looking for an increase to 4.2%. Reserve Bank forecasts are based on unemployment averaging 4.3% in the December quarter, requiring an abrupt weakening in the labour market to be realised. That looks extremely unlikely.

Employment growth smashed forecasts, lifting 35,600 compared to 25,000 expected. The full-time workforce swelled by 52,6000. The percentage of the working age population in employment ticked up to 64.4%, equalling the record set two months earlier.

Participation declined marginally from record levels, contributing to the downside surprise in the unemployment rate. Total hours worked were also unchanged, so it was not an uniformly strong report.

Source: ABS

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