Australia reported an acceleration in the unemployment rate in September from a revised 4.3% to 4.5%, above the 4.3% consensus, ING's FX analyst Francesco Pesole notes.

RBA is set to cut in December

"Employment figures for August were also revised lower to -12k, and combined with September’s 15k gain, they make for an essentially flat hiring over the past two months. So even if the rise in unemployment is primarily due to a higher participation rate and not necessarily signalling any material worsening in labour conditions, it does tilt the balance slightly on the dovish side for RBA expectations."

"Does this mean the RBA will cut at the 4 November meeting (18bp priced in)? It will all depend on the 29 October third-quarter inflation numbers. Given two months of higher-than-expected inflation, we think there is a good chance the quarterly figure will remain too hot for a rather cautious RBA to cut rates already in November, even if the bar is now admittedly a bit lower."

"The baseline assumption is that the RBA will cut in December, so an earlier move could shift the AUD/USD profiles slightly lower. Trade news will remain the biggest driver anyway, and we see a de-scalation; 0.68 remains a very reachable target for AUD."