The Australian dollar is dominating today’s FX session, gaining as much as 0.7% against the U.S. dollar following the release of the latest Australian labor market data. The unexpected drop in unemployment once again raises the likelihood of RBA rate hikes, pushing AUDUSD toward multi-year highs.
AUDUSD is trading at its highest level since late September–October 2025. After a week of stagnation, volatility has returned, and the price bounced off the 12-week exponential moving average (EMA12, light purple), reinforcing the long-term uptrend. The pair is now approaching the 0.68–0.69 zone, which has acted as a ceiling for AUDUSD since 2023. A breakout above this level could occur if the labor market continues to tighten and inflation remains elevated. However, reaching multi-year highs is likely to increase caution among traders betting on trend continuation. Source: xStation5
What is driving AUDUSD today?
- Unexpected drop in unemployment: The unemployment rate in Australia fell from 4.3% in November to 4.1% in December, contrary to expectations of a rise to 4.4%. Employment data also surprised positively, with 65.2k new jobs added after a sharp decline in November (forecast: 28.3k). December data are affected by seasonal factors (higher demand for workers during the holiday period), but given inflation at 3.2% (Q3 2025), the report already raises concerns about a potential wage-price spiral.
- Market pricing in RBA rate hikes: The tightening labor market and higher inflation constrain the Reserve Bank of Australia (RBA), which halted rate cuts in August at 3.6%. The latest data push the probability of a rate hike in February to 58%, while the market sees nearly two 25-basis-point hikes by the end of 2026 (Cash Rate Futures).
- Return of risk appetite: The cancellation of Trump’s diplomatic push regarding Greenland and the reduced risk of a new trade war also support capital flows from safe-haven assets (franc, dollar) to riskier currencies, including AUD. The risk-on mood is also reflected in gold’s correction (-0.25%).
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