AUD/CAD hovers above 42-week low after soft Australian jobs data

The Australian Dollar extended losses against its Canadian counterpart, hitting a fresh 42-week low on Thursday, after Australian jobs data for July confounded market expectations and brought forth speculation the Reserve Bank of Australia might have completed its policy tightening cycle.

The Aussie dollar has also been pressured as a result of the sharp deterioration in China’s economy, which dampened risk sentiment.

Australia’s net employment unexpectedly decreased by 14,600 to 14.03 million in July, while market consensus had pointed to a 15,000 growth.

Full-time employment decreased by 24,200 to 9.839 million, while part-time employment increased by 9,600 to 4.187 million, data by the Australian Bureau of Statistics showed.

The seasonally adjusted rate of unemployment rose to 3.7% in July from 3.5% in June to the highest level since April. The number of unemployed persons surged by 35,600 to 541,000 in July.

“Cracks are finally appearing in the employment data, and that should clear up any doubt over whether the RBA is done hiking,” Matt Simpson, senior market analyst at City Index, was quoted as saying by Reuters.

“They’re done at 4.1% as far as I’m concerned now, with persistently weak data from China and easing from the (People’s Bank of China) adding to the case of a peak rate.”

The RBA extended the rate pause for a second straight policy meeting in August, as it noted cost pressure in Australia was easing.

As of 7:21 GMT on Thursday AUD/CAD was edging down 0.39% to trade at 0.8658. During the early phase of the Asian session, the minor Forex pair went down as low as 0.8624. The latter has been the pair’s weakest level since October 24th 2022 (0.8620).