The Australian dollar experienced a boost, climbing to US65.60¢, a rise from its previous mark of US65.35¢. This increase follows the release of an unexpectedly strong jobs report, which has significantly tempered expectations for a near-term interest rate cut by the Reserve Bank of Australia. The robust employment data suggests a resilient economy, potentially delaying any monetary easing measures.
In response to the jobs data, Australian government bond yields saw upward movement. The policy-sensitive three-year government bond yield increased by 5 basis points, settling at 3.76 per cent. Simultaneously, the 10-year return also experienced a gain, rising by 3 basis points to reach 4.41 per cent. These yield movements reflect the market’s reassessment of the likelihood and timing of future rate cuts.
Financial markets have adjusted their forecasts, now indicating a reduced probability of interest rate reductions. The likelihood of a rate cut by June 2026 has decreased to 50 per cent, a notable shift from the 80 per cent probability that was priced in just last week. This adjustment underscores the influence of economic data on market expectations and the dynamic nature of monetary policy outlooks.
