AUD holds above key support ahead of jobs data as market eyes RBA policy path

Daily Currency Update

The Australian Dollar (AUD) is trading modestly lower on Wednesday, easing from its year-to-date high of US$0.6690 reached earlier in the week. Despite the pullback, the currency remains relatively well-supported, with downside attempts finding a base around the US$0.6665–US$0.6670 area — a region that previously acted as resistance and is now offering technical support. The consolidation near recent highs suggests that bullish sentiment remains intact, though investors are showing signs of caution ahead of key domestic economic data. All eyes are now on the upcoming Australian labour market report for August, scheduled for release on Thursday, which could prove pivotal in shaping near-term expectations for monetary policy. Economists widely expect the unemployment rate to remain steady at 4.2%, reflecting continued resilience in the labour market. However, the pace of job creation is projected to slow, with net employment growth forecast at 22,000, down slightly from the 24,500 jobs added in July. Any significant deviation from these expectations — particularly a sharp drop in employment or a surprise uptick in the unemployment rate — could have a meaningful impact on market sentiment and influence the Australian Dollar's trajectory. The data will also be closely scrutinised by the Reserve Bank of Australia (RBA) as it assesses the evolving balance between inflation risks and the strength of the domestic economy. Recent commentary from RBA officials has maintained a cautious tone, with the central bank keeping its options open amid persistent inflationary pressures and global economic uncertainty. While the RBA held interest rates steady at its most recent policy meeting, policymakers have indicated that further tightening remains on the table if inflation proves to be more persistent than anticipated. A stronger-than-expected jobs report could bolster expectations of another rate hike before year-end, providing support for the AUD and potentially pushing the currency back toward, or above, its recent highs. Conversely, any signs of softening in the labour market could temper hawkish expectations and put the AUD under renewed pressure, especially in a global environment where other central banks, such as the Federal Reserve, remain firmly focused on data-driven decisions.