RBA Tightening Bets Keep Aussie on a Knife’s Edge Ahead of Jobs Data
Key Takeaways:
*The RBA has maintained the cash rate at 4.35%, but persistent inflation risks and elevated domestic demand have kept the possibility of further tightening alive.
*Underlying inflation remains around 3.6%, above the RBA’s 2%–3% target, while unemployment is near 4.5%. Tomorrow’s employment report will therefore be closely watched for evidence of whether labour-market conditions are cooling sufficiently to ease inflationary pressure.
*A strong jobs report or lower unemployment could reinforce rate-hike expectations and support the Australian dollar, while weaker employment data could reduce tightening expectations and weigh on AUD.
Market Summary:
The Australian dollar remains sensitive to evolving Reserve Bank of Australia policy expectations as markets digest the central bank’s latest communications and prepare for key labour market data. The RBA has held the cash rate steady at 4.35 percent in recent meetings after cumulative increases of 75 basis points earlier this year. Minutes from the August Monetary Policy Board meeting and subsequent remarks from Governor Michele Bullock have underscored persistent upside risks to inflation, including elevated energy prices linked to Middle East developments, ongoing domestic demand pressures, and the inflationary effects of the global AI and data-centre investment boom.
Recent economic data reinforce this cautious stance. Underlying inflation continues to run above the RBA’s 2–3 percent target range, with core measures around 3.6 percent, while headline readings remain elevated. Labour market conditions have eased modestly but remain relatively tight by historical standards, with the unemployment rate near 4.5 percent. Governor Bullock has noted that a modest further rise in unemployment toward the 4.5–5.0 percent range could assist in restraining inflationary pressures, yet the Board has signalled readiness to tighten further if upside risks continue to materialise. Markets currently assign a high probability to a 25-basis-point rate increase at the upcoming September 29 meeting.
Tomorrow’s Australian employment report will serve as an important input into these expectations. A stronger-than-anticipated outcome—solid job gains or a stable-to-lower unemployment rate—would likely reinforce the case for additional tightening and provide near-term support for the Australian dollar. Conversely, a weaker print that points to faster labour-market softening could temper rate-hike odds and weigh on the currency, particularly if it raises questions about the durability of domestic demand. Overall, the Aussie’s near-term direction remains closely tied to the evolving balance between inflation persistence and labour-market dynamics as the RBA approaches its next policy decision.
Technical Analysis
AUDUSD, H4:
The AUD/USD pair has broken below its key support level at 0.7135, marking a significant break in its previous uptrend structure and providing a bearish signal for the pair. The breakdown suggests that selling pressure has strengthened, with buyers struggling to maintain the previous bullish trajectory.
Following the breakdown, AUD/USD has attempted to stabilize around the 0.7135 area, but the recovery momentum appears weak. The inability to regain stronger upward momentum suggests that the previous support level may now act as a resistance area, increasing the risk of further downside if selling pressure resumes.
The previous low at 0.7080 is now the key support level to watch. Should AUD/USD fail to hold above 0.7080, this would provide further confirmation that bearish momentum is dominating and could trigger another leg of selling pressure toward the next major psychological support level at 0.7000.
Resistance Levels:0.7135, 0.7265
Support Levels:0.6985, 0.6840Publication date:
2026-09-23 10:58:30 (GMT)
