Commerzbank’s Volkmar Baur says recent Australian labor market and inflation data provided little new momentum for the Australian Dollar (AUD) and support the view that the Reserve Bank of Australia (RBA) is unlikely to hike again this year. Mixed employment and inflation details, plus the distant August meeting, should see markets gradually price in 2027 rate cuts, keeping the Aussie under pressure.

Muted data keep RBA on hold and AUD heavy

"All in all, the labor market data released today and the inflation figures released yesterday are unlikely to have provided much new momentum for the Australian dollar. The data were all somewhat lackluster. With an eye toward the next RBA meeting, the data are therefore unlikely to have provided much new momentum."

"Generally speaking, however, I would say that the data supports our assessment that another rate hike by the RBA is unlikely. While the unemployment rate fell slightly again, it still remains on an upward trend."

"All in all, no new jobs were created in the last two months. The number of full-time jobs actually declined overall."

"Yesterday’s inflation figures were just as mixed. While the headline rate fell to 4.0% (unrounded, even to 3.96%), this was due to a series of government interventions that artificially suppressed prices."

"We therefore stand by our assessment that the RBA will not raise interest rates again this year. Over the course of the year, the market is likely to begin pricing in interest rate cuts for next year. This is likely to continue weighing on the Aussie."

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