AUD/USD surges post-RBA rate cut amid strong jobs data

AUD/USD edges higher on mixed data

The Australian dollar holds ground amid strong jobs data and Reserve Bank of Australia's (RBA) interest rate cut, while markets await January consumer price index (CPI) figures for further direction.

AUD/USD finished marginally higher last week at 0.6356 (+0.08%). Earlier gains were partially unwound as the United States (US) dollar attracted safe-haven flows ahead of the weekend.

RBA rate cut and jobs data support AUD

The rise in AUD/USD followed the RBA's 25 basis point (bp) rate cut on Tuesday and robust Australian employment data on Thursday. The economy added 44,000 new jobs in January, more than double market expectations of 20,000.

While the unemployment rate ticked higher to 4.1% from 4%, this was largely attributed to the participation rate reaching a record high of 67.3%, influenced by strong immigration flows.

Immigration is also impacting wage pressures, with last week's quarterly wage data showing growth slowed to 3.2% year-on-year (YoY) in the fourth quarter (Q4), down from a revised 3.6% in the third quarter (Q3).

The combination of resilient labour market data and softening wage growth should allow the RBA to maintain its focus on upcoming inflation and growth data when considering future policy moves.

RBA speakers and CPI in focus

• RBA Assistant Governor Brad Jones speaks on Tuesday, 25 February at 1.45pm (AEDT)
• RBA Head of Economic Analysis Michael Plumb on Thursday, 27 February at 8.00am (AEDT)

Monthly CPI indicator

Date: Wednesday, 26 February at 11.30am (AEDT)

In December, the Monthly CPI indicator showed headline inflation rose by 2.5% in the 12 months to December, up from 2.3% in November. Meanwhile, annual trimmed mean inflation eased to 2.7% from 3.2%.

For January, headline inflation is expected to rise to 2.6% YoY as energy rebates wind down. Trimmed mean inflation is forecast to ease marginally to 2.6% YoY from 2.7%.

The rates market starts the week pricing in a full 25 bp rate cut by July and a cumulative 43 bp of RBA rate cuts for 2025.

AU monthly CPI indicator chart

AUD/USD technical analysis

From its late September 2024 high of 0.6942 to the early February low of 0.6087, AUD/USD fell by approximately 12.2% in just four months.

AUD/USD has since commenced a counter-trend rally, breaking above resistance in the 0.6350 – 0.6370 area last week. While AUD/USD remains above short-term support at 0.6330 – 0.6320, the rally has scope to extend towards the 200-day moving average at 0.6551.

However, a sustained break below support at 0.6330 – 0.6320 would suggest the corrective rally has run its course and that the downtrend has resumed.

AUD/USD daily chart

• _{Source: TradingView. The figures stated are as of 24 February 2025. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation.}