AUD: Jobs data to guide RBA path – BBH
Brown Brothers Harriman’s (BBH) Global Head of Markets Strategy Elias Haddad points out that the RBA has resumed tightening, lifting the cash rate to 3.85% and signaling more hikes as demand and labor markets remain strong. Futures price further increases over twelve months.

Brown Brothers Harriman’s (BBH) Global Head of Markets Strategy Elias Haddad points out that the RBA has resumed tightening, lifting the cash rate to 3.85% and signaling more hikes as demand and labor markets remain strong. Futures price further increases over twelve months. He sees Australia’s January labor force report as pivotal for rate expectations and AUD performance.

Labor market key for AUD rates

"At the February 3 policy meeting, the RBA voted unanimously to raise the cash rate target by 25bps to 3.85%, the first increase since 2023."

"Moreover, the RBA signaled that more hikes are in the pipeline highlighting that “private demand is growing more quickly than expected, capacity pressures are greater than previously assessed and labour market conditions are a little tight.”"

"As such, Australia’s January labor force report (Wednesday) will set the RBA rate hike tone."

"Stronger jobs growth would lift bets on 50bps of hikes over the next twelve months in favor of a firmer AUD, while softer data would pare those odds and drag AUD a little lower."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

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