AUD Holds Ground as RBA Rate Hike Bets Remain Intact

The Australian dollar has maintained its position against the US dollar after mixed August labour market data was released. The unemployment rate rose to 4.6% in August, but analysts still expect the Reserve Bank of Australia (RBA) to raise interest rates next week.

The AUD/USD trades at 0.7037, hovering around the 200-day moving average band identified by Societe Generale as 0.7040 to 0.7010. Despite the unemployment rate increase, employment rose by 39,500 in August, exceeding market expectations of a 20,000 gain.

ANZ notes that while the headline employment figure appears strong, the broader signal from the release suggests labour market easing, which will help reduce inflationary pressures. The rise in participation to 67.1% and hours worked by 0.7% also indicate gradual labour market adjustment.

CBA expects a 25 basis point interest rate hike next week to 4.60%, with Westpac economist Ryan Wells warning that some of August's strength may be due to residual seasonality, which could partially unwind in September.

Markets price around a 90% chance of a RBA hike at the meeting on 29 September, with Governor Michele Bullock indicating that an unemployment rate between 4.5 and 5 would help ease pressure on inflation.