The Australian dollar rose in Asian trading on Thursday against a basket of global currencies, attempting to recover from a two-month low against its US counterpart, with moderate buying activity emerging from lower levels following the release of positive Australian labour market data.

The data showed stronger-than-expected growth in new Australian jobs in May, while the unemployment rate retreated from a four-and-a-half-year high, indicating that Australia's labour market is beginning to regain momentum. This could pave the way for the Reserve Bank of Australia to raise interest rates again later this year.

The Price

Australian dollar exchange rate today: The Australian dollar rose 0.2% against the US dollar to 0.6908, from today's opening level of 0.6894, and recorded a session low of 0.6888.

The Australian dollar ended Wednesday's trading down about 0.25% against the US dollar, marking its third consecutive daily loss and touching a two-month low of 68.83 US cents, as investors continued to favour the US dollar as the most attractive available investment.

Australian labour market

Figures released by the Australian Bureau of Statistics on Thursday showed net employment increased by 40.3 thousand jobs in May, the strongest pace of job creation since February and above market expectations of a 31.2 thousand increase. In April, employment had declined by 40.7 thousand after being revised lower from a previously reported decline of 18.6 thousand.

Government data also showed the unemployment rate fell to 4.4%, in line with market expectations of 4.4%, after reaching 4.5% in April, its highest level since November 2021.

The data suggests tighter conditions may be returning quickly to Australia's labour market, potentially renewing pressure on policymakers at the Reserve Bank of Australia and strengthening expectations for another Australian interest rate hike later this year.

Australian interest rates

Following the data release, market pricing for a 25-basis-point interest rate increase by the Reserve Bank of Australia in August remained around 20%.

To reassess those expectations, investors are awaiting further Australian data on inflation, unemployment, and wages.

Opinions and analysis

Russell Chesler, Head of Investments at VanEck, said: "This is not the clear slowdown signal that markets were hoping for. For an economy that is supposedly losing momentum, Australians are still working and still spending."

He added: "We remain data dependent, but our view is that there could be another interest rate increase during this cycle."