The Australian dollar slipped below $0.70 to a two-week low after a weaker-than-expected September jobs report led traders to pare back expectations for further interest rate increases. The unemployment rate rose to 4.7%, above the 4.6% consensus forecast, and August’s figure was revised higher from its initial 4.6%. Overall employment fell by 39,300, compared with expectations for a 20,000 increase, though full-time positions rose by 34,400.
The data indicated that the labor market may be starting to loosen following the Reserve Bank of Australia’s cumulative 1 percentage point increase in the cash rate this year to 4.60%, one of the most aggressive tightening cycles among advanced economies. Money markets now assign less than a 20% probability to a rate hike in November, down from 35% earlier in the day, while the implied odds of a move in December have dropped to 40% from 60%. Expectations for additional tightening have also been pushed further out, with May 2027 now showing the highest implied probability of a hike at 80%.