The Australian Dollar (AUD) is outperforming, with AUD/USD breaking above 0.6800 after a robust December jobs report showing 65.2k positions added and the unemployment rate falling to 4.1%, BBH FX analysts report, BBH FX analysts report.

RBA rate-hike bets surge ahead of February meeting

"AUD is outperforming, while AUD/USD broke above psychological resistance at 0.6800. Australia’s December jobs report was strong. The economy added more jobs than expected 65.2k (consensus: 27k) vs. -28.7k in November. Full-time employment surged 54.8k, partly reversing November’s loss, while part-time employment increased 10.4k after rising 36.6k in November."

"The unemployment rate unexpectedly dropped 0.2pts to 4.1% (consensus: 4.3%), which is well below the RBA’s year-end projection of 4.4%. In parallel, the tick up in the participation rate (0.1pts to 66.7%) and the rise in hours worked (0.4% m/m) point to a modest tightening in labor market conditions."

"Bets for a 25bps RBA rate hike to 3.85% at the upcoming February 3 meeting more than doubled to 60%. If next week’s December CPI data shows trimmed mean inflation above the RBA’s 3.2% y/y projection, that could seal the deal for a February rate increase and turbocharge AUD."