Synopsis:

MUFG analyzes the implications of Australia's robust employment report, suggesting it may pave the way for a final rate hike by the Reserve Bank of Australia (RBA). The report's impact on the Australian dollar's performance, particularly against the US dollar and Japanese yen, is also explored, with key resistance levels identified.

Key Insights:

• Strong Employment Data: Australia's October employment report showed a significant increase in jobs, with some impact from the recent referendum. Despite this, the trend in employment growth remains robust, supporting a stable unemployment rate.

• Implications for RBA Policy: The solid employment figures maintain the possibility of one more RBA rate hike this year, keeping the door open for further monetary tightening.

• AUD/USD Performance: Despite the positive report, the Australian dollar has underperformed, particularly against the US dollar. After a recent surge from 0.6360 to 0.6542, AUD/USD faces a key resistance level at the 200-day moving average of 0.6596.

• AUD/JPY Movement: The Australian dollar has shown notable strength against the Japanese yen, breaking above the 98.00-level for the first time since September 2022. Significant resistance is anticipated at the 100.00-level, a threshold last crossed in late 2014 and previously in Q2 2013.

Conclusion:

The Australian employment report's strong showing reinforces expectations of potential monetary policy tightening by the RBA, which could influence the Australian dollar's trajectory. While AUD/USD has seen recent gains, it faces notable resistance ahead. Similarly, AUD/JPY's rise to multi-year highs suggests a critical juncture at the 100.00-level, underscoring a pivotal moment for AUD against major currencies. Investors and traders should closely monitor these key resistance levels and the RBA's response to the employment data.