Investing.com– The Australian dollar rose sharply on Thursday, rebounding from a one-year low after stronger-than-expected jobs data raised doubts about the timing of interest rate cuts by the Bank Australian Reserve.
The pair jumped 0.7% to $0.6411, quickly rebounding from its weakest levels since November 2023.
The spike in the currency came after labor data for November showed a stronger-than-expected rise in the , while Australia slipped to 3.9% from an unexpected 4.1%.
The reading indicated that the Australian labor market remained strong, undermining expectations for interest rate cuts by the RBA. Traders were seen significantly reducing bets that the central bank would cut rates in February 2025, with the general consensus moving more towards a cut in the second quarter.
“We expect the first cut to take place in May 2025. Softer economic data from the recently released national accounts raised the risk of a cut in February, but this labor market outcome counters that risk slightly,” ANZ analysts wrote in a note.
Peer Westpac also expects the RBA to start cutting rates from May, in what is expected to be a shallow easing cycle.
The RBA was at a meeting earlier this week, but they struck a slightly lower chord against economic growth in the country.
But the bank has given few hints on when it plans to start cutting rates, citing concerns about sticky inflation and strength in the labor market.
