The Australian dollar fell in European trading on Thursday against a basket of global currencies, resuming the losses that had briefly paused against its US counterpart, heading back toward its two-month low as selling pressure returned following gloomy labor market data from Australia.

Data showed that the unemployment rate unexpectedly rose in September to its highest level in nearly four years, marking the latest sign of an economic slowdown and strengthening expectations for an Australian interest rate cut in November.

Price Overview

The AUD/USD exchange rate fell by 0.5% to 0.6480, down from the opening level of 0.6512, after touching a session high of 0.6516.

The Australian dollar had closed Wednesdays session up by 0.4% against the US dollar, as part of a recovery from the two-month low of 0.6440 recorded the previous day.

Weak Data

Figures released by the Australian Bureau of Statistics on Thursday showed that net employment rose by 14,900 jobs in September, compared with a revised decline of 11,900 in August. The increase fell short of market expectations for a gain of 20,500 jobs.

The data also showed that the unemployment rate rose to 4.5% in September the highest since November 2021 exceeding market forecasts of 4.3%. The August figure was revised upward to 4.3% from the previous 4.2%.

Australian Interest Rates

Following the release of the data, market pricing for a 25-basis-point rate cut by the Reserve Bank of Australia (RBA) in November rose from 40% to 72%.

The RBA kept interest rates unchanged at 3.60% in September, after three cuts earlier this year, as it awaits more inflation data before making further policy decisions.

Opinions and Analysis

Harry Murphy Cruise, head of economic research at Oxford Economics Australia, said: The Reserve Bank of Australia finds itself between a rock and a hard place. Inflation appears set to rise above the RBAs latest forecasts, while the labor market is weaker than expected. We still believe a rate cut in November is justified.

Tony Sycamore, analyst at IG, said: The Reserve Bank of Australia had expected some cooling in the labor market. However, its latest projections did not anticipate the unemployment rate rising to around 4.5% not this year, not next year, nor in 2027. Sycamore added, The RBA now finds itself in a very difficult position.