The Australian monthly employment report is scheduled for release on Thursday at 00:30 GMT, and market participants anticipate a modest increase in jobs in January. The Australian Bureau of Statistics (ABS) is expected to announce that the country added 20K new jobs in the month, while the Unemployment Rate is forecast at 4.2%, up from the 4.1% posted in December. The Participation Rate is seen at 66.8%, pretty much unchanged from the previous 66.7%.
The ABS reports both full-time and part-time positions through the monthly Employment Change. Generally speaking, full-time jobs entail working 38 hours or more per week, usually include additional benefits, and typically provide a consistent income. On the other hand, part-time employment generally means higher hourly rates but lacks consistency and benefits. That’s why the economy prefers full-time jobs. In December, Australia gained 10.4K part-time positions and 54.8K full-time ones.
Australian unemployment rate expected to tick higher in January
Australian employment data follows the Reserve Bank of Australia (RBA) monetary policy decision, which somewhat diminishes the impact of the figures, particularly given the RBA’s decision to hike the Official Cash Rate (OCR).
Officials assessed inflation risks, noting that they expect it to remain above target for some time. Additionally, policymakers noted that different indicators suggest that labor market conditions remain “a little” tight. As a result, the Board increasedthe OCR by 25 basis points to 3.85%.
Data from December supported the decision, with headline inflation at 3.8% YoY, driven by stubbornly high services-related inflation and well above the RBA’s 2%-3% target. Wage growth in the last quarter of 2025 also surpassed the RBA’s goal, with the Wage Price Index up to 4.1% YoY.
RBA Governor, Michele Bullock, acknowledged that the decision has a negative impact on householders. “I know this is not the news that Australians with mortgages want to hear, but it is the right thing for the economy,” she said. “Based on the data we’ve seen and the conditions here and around the world, the board now thinks it will take longer for inflation to return to target, and this is not an acceptable outcome,” Bullock added.
Finally, the minutes showed that policymakers have not committed to further hikes but left the door open to additional tightening. Like most central banks around the world, the RBA announced decisions will be data-dependent and made meeting by meeting.
January’s anticipated employment figures are hardly enough to prompt the RBA to reconsider its new rate policy, although it will keep the case of a tight labor market alive. Nevertheless, higher-than-anticipated job creation could fuel bets of additional interest rate hikes and fuel demand for the Australian Dollar (AUD). The opposite case is also valid, with a softer-than-expected outcome dragging the Aussie lower alongside odds for additional hikes.
When will the Australian employment report be released and how could it affect AUD/USD?
The ABS January employment report will be released early on Thursday. As previously noted, the Australian economy is expected to have added 20K new jobs in the month, while the Unemployment Rate is forecast at 4.2%. Market participants will also be attentive to the breakdown of full-time and part-time positions.
Valeria Bednarik, Chief Analyst at FXStreet, notes: “The AUD/USD pair peaked at 0.7147 in the second week of February, its highest since January 2023. It currently trades in the 0.7070 region, following a corrective decline towards the 0.7000 mark. The bullish momentum receded, but the case for higher highs ahead remains alive and kicking.”
“The daily chart for AUD/USD shows it is trading well above bullish moving averages, with the 20-day Simple Moving Average (SMA) providing dynamic support at around 0.7010, further supporting the psychological level. Technical indicators, in the meantime, eased from their recent highs but remain in positive territory, with the Relative Strength Index (RSI) indicator consolidating around 63. Overall, the risk of a steeper decline seems well-limited,” Bednarik adds.
As for the pair’s near-term outlook, Bednarik says: “An upbeat report could push AUD/USD to 0.7100 and beyond, with near-term resistance at 0.7130. Steady gains beyond the latter expose the mentioned multi-month high in the 0.7140 area. A discouraging report, on the other hand, could see AUD/USD nearing 0.7000, although buyers are likely to reappear on approaches to it.”
Economic Indicator
Employment Change s.a.
The Employment Change released by the Australian Bureau of Statistics is a measure of the change in the number of employed people in Australia. The statistic is adjusted to remove the influence of seasonal trends. Generally speaking, a rise in Employment Change has positive implications for consumer spending, stimulates economic growth, and is bullish for the Australian Dollar (AUD). A low reading, on the other hand, is seen as bearish.
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RBA FAQs
The Reserve Bank of Australia (RBA) sets interest rates and manages monetary policy for Australia. Decisions are made by a board of governors at 11 meetings a year and ad hoc emergency meetings as required. The RBA’s primary mandate is to maintain price stability, which means an inflation rate of 2-3%, but also “..to contribute to the stability of the currency, full employment, and the economic prosperity and welfare of the Australian people.” Its main tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will strengthen the Australian Dollar (AUD) and vice versa. Other RBA tools include quantitative easing and tightening.
While inflation had always traditionally been thought of as a negative factor for currencies since it lowers the value of money in general, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Moderately higher inflation now tends to lead central banks to put up their interest rates, which in turn has the effect of attracting more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in the case of Australia is the Aussie Dollar.
Macroeconomic data gauges the health of an economy and can have an impact on the value of its currency. Investors prefer to invest their capital in economies that are safe and growing rather than precarious and shrinking. Greater capital inflows increase the aggregate demand and value of the domestic currency. Classic indicators, such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can influence AUD. A strong economy may encourage the Reserve Bank of Australia to put up interest rates, also supporting AUD.
Quantitative Easing (QE) is a tool used in extreme situations when lowering interest rates is not enough to restore the flow of credit in the economy. QE is the process by which the Reserve Bank of Australia (RBA) prints Australian Dollars (AUD) for the purpose of buying assets – usually government or corporate bonds – from financial institutions, thereby providing them with much-needed liquidity. QE usually results in a weaker AUD.
Quantitative tightening (QT) is the reverse of QE. It is undertaken after QE when an economic recovery is underway and inflation starts rising. Whilst in QE the Reserve Bank of Australia (RBA) purchases government and corporate bonds from financial institutions to provide them with liquidity, in QT the RBA stops buying more assets, and stops reinvesting the principal maturing on the bonds it already holds. It would be positive (or bullish) for the Australian Dollar.
Source: https://www.fxstreet.com/news/australia-unemployment-rate-set-to-tick-up-in-january-as-rba-keeps-door-open-to-further-hikes-202602182030
