Credit Agricole CIB Research discusses AUD outlook in light of the RBA policy trajectory after this week's jobs report.
"AUD/USD reached a 11-year low during the Asian session on the back of USD strength as well as a jump in Australia’s unemployment rate from 5.1% to 5.3%. Australia’s underemployment rate (unemployment as well as people wanting to work more hours) also jumped from 8.3% to 8.6% and to a 2-year high," CACIB notes.
"Currently, the trend in the unemployment rate is flat at 5.2%, but if the unemployment rate were higher again next month, the April RBA meeting would definitely be live for a rate cut. The market is currently pricing that prospect at a bit over a 20% chance. Leading indicators for the labour market continue to point to a further slowing in employment growth and a higher unemployment rate. Indeed, high-indebted Australian households will continue to participate in the labour force in record numbers and go in search of many more jobs than there are available. So, we continue to expect the RBA to start cutting rates again in the coming months and further AUD weakness," CACIB adds.