The Australian dollar traded broadly higher against a basket of major currencies during Thursday's Asian session, resuming gains against its US counterpart after a two-day pause and moving closer to its highest level in five weeks following the release of stronger-than-expected Australian labor market data.

The figures highlighted the resilience of the Australian economy and pointed to increasingly tight labor market conditions, reinforcing market expectations that the Reserve Bank of Australia (RBA) may deliver another interest rate hike later this year.

The Price

The Australian dollar rose 0.35% against the US dollar to 0.7021, up from the day's opening level of 0.6996, after touching an intraday low of 0.6987.

On Wednesday, the Australian dollar closed down by less than 0.1% against the US dollar, marking its second consecutive daily decline as traders continued profit-taking and corrective selling after the currency reached a five-week high of US$0.7027.

Australian labor market

Data released by the Australian Bureau of Statistics on Thursday showed net employment increased by 76,300 jobs in June, the strongest monthly gain since April 2025. The reading far exceeded market expectations for an increase of 16,400 jobs. Meanwhile, May's figure was revised higher to a gain of 44,000 jobs from the previously reported 40,300.

The Australian economy adds jobs at the fastest pace in 14 months.

Government data also showed the unemployment rate held steady at 4.4% in June, matching market expectations and unchanged from May.

Australia's unemployment rate remains in line with expectations in June.

The latest data indicates that tight labor market conditions continue to strengthen, increasing pressure on policymakers at the Reserve Bank of Australia and reinforcing expectations of another interest rate hike later this year.

Australian interest rates

Following the release of the data, market pricing for a 25-basis-point interest rate hike by the Reserve Bank of Australia in August rose to above 35%.

Pricing for a 25-basis-point rate hike before the end of the year climbed from 78% to 97%.

Investors will now look for additional inflation and wage data from Australia to further refine interest rate expectations.

Australian dollar outlook

We expect the Australian dollar to remain in positive territory against the US dollar, with the potential to post fresh five-week highs, supported by continued demand for the currency as one of the more attractive opportunities in the foreign exchange market.