The Australian dollar experienced a lift, rising to US65.64¢, a slight increase from US65.54¢. This movement occurred following the release of strong employment figures for July, which has led to speculation that the soft data recorded in June may have been an isolated incident. The robust jobs numbers have seemingly instilled a renewed confidence in the Australian economy, at least for the short term.
In the bond market, yields saw a modest upward adjustment. The three-year bond rate, which is particularly sensitive to policy changes, increased by two basis points, reaching 3.32 per cent. Similarly, the 10-year bond rate also edged higher, gaining one basis point. These shifts in bond yields reflect the market’s reaction to the improved economic data and potential implications for monetary policy.
Despite the positive jobs data, money markets continue to indicate a significant expectation of monetary easing. Current pricing suggests a 44 per cent probability that the Reserve Bank of Australia (RBA) will reduce the cash rate next month. Furthermore, markets are fully pricing in an easing of monetary policy by November, suggesting that investors anticipate further action from the RBA in the near future.
