Resilient Jobs Data Keeps RBA Hike Risk Alive, Supporting AUD/USD

Key Moments

Labor Market Strength and RBA Outlook

OCBC’s Christopher Wong notes that robust January employment data are keeping the possibility of further Reserve Bank of Australia tightening on the table, which in turn is offering support to the Australian Dollar.

According to Wong, “January labour market data kept pressure on the RBA to consider a higher cash rate, offering underlying support for the risk-sensitive AUD.”

Market Reaction and Geopolitical Backdrop

Despite the constructive domestic data, gains in the Australian Dollar were described as limited. Wong commented that “Still, the currency gained only modestly as geopolitical worries weighed on global equities overnight.”

He added that “A firmer global pro-cyclical backdrop should provide a more constructive base for further AUD strength, and we continue to target AUDUSD at 0.73 by end-2026.”

Unemployment, Projections, and Rate Expectations

OCBC highlighted that “Australia’s unemployment rate held broadly steady at 4.1% in January, while full‑time hiring posted another solid month. Unemployment is running below the RBA’s February projections (4.3% for 2Q26), which should keep the central bank’s tone relatively hawkish.”

Rate markets are seen echoing this assessment. As Wong noted, “Interest rate markets remain aligned with this view, with OIS still pricing nearly a full 25bp hike by June.”

Key Data and Market Metrics