The Australian dollar slid to a three-week low against its US counterpart in Asian trading on Thursday, as open selling accelerated following gloomy labor market data out of Australia.

The data showed that the country's unemployment rate rose to its highest level in three and a half years, with fewer jobs added than expected in June. This marked the latest sign of slowing economic growth in Australia and increased the likelihood of a rate cut by the Reserve Bank of Australia in August.

The Price

AUD/USD today: The Australian dollar dropped by 0.9% to (0.6473), its lowest level since June 24, down from the days opening level of (0.6553). It recorded a session high at (0.6533).

On Wednesday, the Australian dollar rose 0.2% against the US dollar its first daily gain in four sessions following weaker-than-expected US producer price data.

Australian Labor Market

Figures released Thursday by the Australian Bureau of Statistics showed that the unemployment rate climbed to 4.3% in June, its highest level since November 2021, up from 4.1% in May and exceeding market expectations for a rise to 4.1%.

The Australian economy added around 2,000 new jobs in June, falling well short of market expectations for 21,000 jobs, after losing around 1,100 jobs in May.

The soft labor market is the latest indication of weak economic growth in Australia, which may prompt the Reserve Bank of Australia to ease monetary policy and cut interest rates.

Comments and Analysis

IG analyst Tony Sycamore said: "There are clear signs of labor market weakness. This raises questions about the RBAs decision to prioritize inflation over growth and employment at its meeting earlier this month."

Sycamore added: "Theres no doubt the RBA will be keen to correct course at its August meeting."

Harry Murphy Cruise, head of economic research at Oxford Economics Australia, stated: "While were not ringing alarm bells just yet, Junes slowdown is another solid reason for the RBA to move cautiously toward rate cuts."

Australian Interest Rates

Following the labor market data, interest rate swap contracts now imply more than 50 basis points of easing by year-end.

Market pricing for a 25-basis-point rate cut by the RBA in August rose from 76% to 85%.

The RBA has cut rates twice since February, bringing the benchmark rate to 3.85%, as inflation has slowed into the target range of 2% to 3%.