AUD/JPY hits 1-week high as Australia jobs growth mounts pressure on RBA

Key points

The Australian Dollar surged over 0.5% against the Japanese Yen on Thursday, after Australian jobs data for June far exceeded market expectations, suggesting a resilient labor market and mounting pressure on the RBA to continue raising interest rates.

Australia’s net employment rose by 32,600 to 14.05 million in June, easily outpacing market consensus of a 15,000 growth and following a revised up 76,600 gain in May.

Full-time employment rose by 39,300 to 9.868 million, while part-time employment dropped by 6,800 to 4.177 million, data by the Australian Bureau of Statistics showed.

The seasonally adjusted rate of unemployment was at 3.5% in June, unchanged from a revised down figure in the prior month and staying near October’s 50-year low.

“The Australian dollar has spiked higher across the board after the economy delivered another rate-hike defying report,” Matt Simpson, senior market analyst at City Index, was quoted as saying by Reuters.

“Ultimately, it’s another strong set of employment figures which keeps the pressure on a data-dependant (Reserve Bank of Australia) to potentially hike rates in August.”

In other news, China left its 1-year and 5-year loan prime rates without change at 3.55% and 4.2% respectively, in line with expectations. China’s central bank said that it had raised a parameter on cross-border corporate financing under its macro-prudential assessments to 1.5 from 1.25.

The move is expected to make it easier for local companies to raise funds from markets abroad at a time when the Chinese Yuan has been under downward pressure amid an economic recovery that is losing steam.

Meanwhile, macro data out of Japan showed earlier on Thursday that the nation’s trade balance surprisingly shifted to a surplus of JPY 43.05 billion in June from a deficit of JPY 1,374.99 billion in the same month of 2022. The median analyst estimate had pointed to a trade gap of JPY 46.7 billion. It has been the first trade surplus after 22 consecutive months of shortfalls.

As of 7:15 GMT on Thursday AUD/JPY was gaining 0.63% to trade at 95.107. During the late phase of the Asian session, the minor Forex pair went up as high as 95.243. The latter has been the pair’s strongest level since July 14th (95.382).