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Australian Dollar Falls as Unemployment Hits 4-Year High

Australia’s unemployment rose to a four-year high, fuelling RBA rate-cut bets and sending the Australian dollar lower across major pairs.

Matt Simpson
Matt Simpson

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Australian Dollar Falls as Unemployment Hits 4-Year High

Australia’s unemployment rate rose to a four-year high of 4.5% in September, according to the latest Labour Force report from the Australian Bureau of Statistics (ABS). While still low by historical standards (the long-term average sits at 6.54%) the trend is clearly rising.

Unemployment has been steadily climbing from its record low over the past two years, but the pace now appears to be increasing. September’s 0.2-percentage-point increase was the second such rise in four months. Over the past 11 months, the rate has risen four times, held steady four times, and fallen only once in November last year.

 

 

 

Australian Dollar Weakens as Traders Price In RBA Rate Cut

Line and bar chart showing Australia’s unemployment rate rising to 4.5% alongside the participation rate near record highs through September 2025. The unemployment trend has been steadily climbing for two years, with the latest 0.2-percentage-point increase marking the second such rise in four months. Participation edged up to 67%, the employment-to-population ratio held at 64%, and total employment rose 14.9 k.

Chart analysis by Matt Simpson - data source: Australian Bureau of Statistic (ABS), LSEG

 

Employment Growth Remains Positive but Slows

Job growth was relatively weak at 14.9k, but still growing with 8.7k full-time jobs added to 6.2k part time. While August’s figures saw job growth revised lower to -11.k from -5.4k (and full-time to -48.k from -40.9k), this is backwards looking and not a huge increase from the original estimates.

Bar chart comparing Australia’s monthly employment change, full-time, and part-time job growth through September 2025. Total employment rose 14.9 k, with 8.7 k full-time and 6.2 k part-time jobs added. August job growth was revised lower to -11.8 k from -5.4 k, and full-time employment revised to -48.6 k from -40.9 k.

Chart analysis by Matt Simpson - data source: Australian Bureau of Statistic (ABS), LSEG


RBA Rate Cut Speculation Builds — But It’s Not a “Slam Dunk”

While this has renewed some market excitement about a potential RBA rate cut, I don’t think it makes it a slam dunk. The participation rate ticked up by 0.1 percentage point to 69%, not far from its record high. The employment-to-population ratio held steady at 64%, and 14.9k jobs were added overall — with full-time employment up 8.7k and part-time up 6.2k. These figures aren’t exactly screaming “recession,” even though unemployment is rising.

 

RBA Minutes Highlight Ongoing Inflation Risks

The RBA minutes were slightly more hawkish, noting that household consumption and growth have been stronger than expected. Policymakers described the labour market as still “tight.” Even if today’s data suggest it’s slightly less so, the employment sector has hardly collapsed. Perhaps more importantly, the minutes also stated that “recent data suggested that inflation in the September quarter may be higher than had been expected in the August Statement on Monetary Policy.”

 

RBA Likely to Wait for CPI Before Considering Rate Cuts

Ultimately, I do not see the RBA cutting rates without first seeing the next quarterly CPI figures — particularly while they remain on guard for higher-than-expected inflation, stronger growth, and resilient consumption, even as unemployment edges higher.

 

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AUD/NZD Leads Losses as Australian Dollar Slumps

The Australian dollar is the weakest currency of the day, with bears toying with the idea of an RBA rate cut in December. AUD/USD is the weakest major pair, currently down 0.4%, while AUD/JPY fell as much as 0.8% before recovering some losses. AUD/NZD is the weakest Australian dollar cross, down 0.7% on the day, and has also been the most volatile — trading within a high-to-low range equal to 128% of its 10-day ATR.

Bar and candle chart showing daily percentage moves of major and cross currency pairs from the Asia open, with the Australian dollar underperforming. AUD/USD, AUD/JPY, and AUD/NZD were among the weakest pairs, while GBP/AUD led gains. The lower panel compares daily trading ranges relative to the 10-day ATR, highlighting AUD/NZD as the most volatile pair of the session at around 128% of its average range.

Chart analysis by Matt Simpson – data source: LSEG.

 

AUD/NZD Technical Analysis: Australian Dollar vs New Zealand Dollar

The weekly chart shows that the strong rally from the May low has come to a halt, with a shooting star and bearish pinbar hinting at a retracement. Today’s news flow has worked against the Australian dollar, sending AUD/NZD to a three-week low.

The daily chart suggests a head and shoulders top pattern has formed, projecting a downside target near the 38.2% Fibonacci retracement, around 1.1140. Unless a swift rebound occurs, AUD/NZD is on track for a bearish engulfing or outside day.

Bears may look to fade into rallies within today’s range and maintain a near-term bearish bias while prices remain beneath 1.14. Note that the 2024 high, monthly S1 pivot, and 50-day EMA converge around 1.1180, creating a potential support zone ahead of the H&S downside target.

Side-by-side weekly and daily AUD/NZD charts showing a potential head and shoulders top pattern following a strong rally from the May low. The weekly chart highlights a shooting star and bearish pinbar, while the daily chart projects a downside target near 1.1140 at the 38.2% Fibonacci retracement. Key support levels are seen near 1.1180 at the 2024 high and monthly S1 pivot.

Chart analysis by Matt Simpson - Source: LSEG

 

 

View the full economic calendar
View the full economic calendar

 

-- Written by Matt Simpson

Follow Matt on Twitter @cLeverEdge

 

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