FX.co ★ Australian Dollar Approaches 16-Month High

The Australian dollar rallied to approximately $0.679 on Thursday, nearing a sixteen-month peak, as improved relations between the US and Europe uplifted market sentiment. Concurrently, robust domestic employment figures bolstered expectations for an imminent interest rate hike. December witnessed a remarkable increase in employment, with 65,200 jobs added, significantly surpassing projections. Moreover, the unemployment rate unexpectedly declined to 4.1%, marking a seven-month low. The strong labor market performance, coupled with increased household spending, indicates the economy is growing more swiftly than anticipated. Consequently, market participants have significantly raised the likelihood of a 25 basis point rate hike at the Reserve Bank's upcoming meeting on February 3. The probability surged from 27% to 54% following the data release, with a hike fully anticipated by May. Attention is now shifting to the release of December-quarter inflation figures next week, as a rise in core inflation could prompt an earlier policy adjustment. Meanwhile, in the international arena, President Trump has dismissed the idea of using force concerning Greenland and abandoned plans to impose tariffs on European countries, alleviating market concerns.