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Australian Dollar Plummets Following Lackluster Jobs Report

　　Lead: The Australian Dollar (AUD) has fallen for a fifth consecutive trading day, sinking to 0.6467 against the US dollar after the employment report released on November 14, 2024, revealed a significant slowdown in job growth with only 15,900 new positions added in October, compared to analysts expectations of 25,000.

Unemployment Rates Static Amid Job Creation Slowdown

　　In the latest jobs report announced on November 14, 2024, the Australian Bureau of Statistics reported that the Australian economy added 15,900 jobs in October, significantly down from September's figure of 61,300. This disappointing growth highlights a potential cooling in the labor market, prompting concerns about future consumer spending amid ongoing inflationary pressures. The unemployment rate remained unchanged at 4.1%, indicating stability in the broader labor market despite the slowdown in job creation.

　　The drop in job growth comes against a backdrop of steadily increasing interest rates, which are currently held at 4.35% by the Reserve Bank of Australia (RBA) after maintaining that rate for eight consecutive meetings. The RBA recognized that headline inflation has shown signs of decline but cautioned that underlying inflation still persists at uncomfortably high levels. As such, a rate cut is not anticipated until 2025, further squeezing the AUD.

Declining Inflation Expectations Provide Some Relief

　　Despite the reduction in job creation, inflation expectations have surprisingly dropped. For November, they fell to 3.8%, the lowest level since October 2021, down from 4% in October. This decline corresponds with the overall inflation rate, which decreased to 2.8% in the third quarter, marking the lowest reading in 14 quarters.

　　The RBA's decision to keep rates unchanged was grounded in the assessment that, while declines in headline inflation can provide positive momentum, the core inflation measures remain strong enough to necessitate caution. The central bank's conclusion points to a complex economic landscape where a balance between growth and inflation control must be struck.

Broader Economic Implications and Market Responses

　　In light of the cooling job data, the Australian Dollars value against the US dollar has continued to slide, dropping by 0.27% to 0.6467 during the European session. Since October 1, the AUD has plunged about 6.4%. Market analysts believe this trend reflects heightened investor anxiety regarding the health of the Australian economy.

　　However, in the United States, the October consumer inflation report revealed a modest increase of 2.6% year-on-year, compared to 2.4% in the previous month. These figures have led the Federal Reserve to indicate that a quarter-point rate cut may be on the table during the December meeting, adding to the contrasting economic narrative between the two nations and its potential impacts on the AUD/USD pairing.

　　Market analysts anticipate the AUD may continue to test support levels, currently at 0.6462. Should this support level fail to hold, further declines could see the currency drop to 0.6438, while resistance points stand at 0.6504 and 0.6528.

Conclusion

　　The Australian economy appears to be navigating a precarious chapter as job creation stagnates and inflationary concerns loom. The RBA's commitment to maintaining current interest rates until a substantial decline in underlying inflation can be reinforced suggests that the outlook for the Australian Dollar may remain bearish in the near term. Traders and investors will closely monitor upcoming economic indicators that could influence the RBA's policies and the AUD's performance moving forward.