Synopsis:

Credit Agricole sees potential for an upside surprise in the upcoming Australian labor report, which could bolster the AUD. Despite a slowdown in real GDP growth, Australia’s labor market remains robust, with strong employment growth and steady job advertisements. The RBA anticipates a rise in the unemployment rate to 4.3% in H2 2024, but Credit Agricole believes the data could continue to outperform.

Key Points:

• Strong Employment Growth: Employment has remained resilient, with the unemployment rate hovering near the estimated natural rate of 4%, despite slower GDP growth.

• Risk of Positive Surprise: Consistent job advertisement levels suggest that labor market data may exceed expectations, adding potential support for the AUD.

• RBA Forecast vs. Current Levels: While the RBA projects the unemployment rate to rise to 4.3% in H2 2024, the current rate is at 4.1%, indicating room for continued strength in labor market data.

Conclusion:

Credit Agricole expects a potential upside surprise in the Australian labor market report, which could provide a lift for the AUD. Continued labor market strength would support AUD resilience, particularly if the data contrasts with the RBA’s forecast for a gradual rise in unemployment.