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Australian labor data preview seen supporting an RBA pause
Brown Brothers Harriman expects June unemployment to hold at 4.4% while job growth is forecast to be modest, with markets implying a 60% chance of a final 25 bps hike to 4.60%.
Brown Brothers Harriman economist Elias Haddad expects Australia’s June labor force report to show a modest gain of about 15,000 jobs, with the unemployment rate steady at 4.4%, slightly above the Reserve Bank of Australia’s projection, according to FXStreet.
The outlook is tied to the idea that the RBA may be able to pause further tightening. Haddad cited projected real GDP growth below potential over the next two years and noted that the RBA cash rate at 4.35% is already near the top of the model-based range for nominal neutral estimates.
BBH also pointed to pricing in interest rate futures, which imply a 60% chance of one final 25 bps hike by year end to 4.60%. Even so, the firm said risks are skewed toward a longer pause, a view it described as a headwind for the Australian dollar.