Australian Dollar Falls as Hike Bets Fade

The Australian dollar depreciated to around $0.71 on Thursday, reversing gains from the previous session as a surprise rise in the unemployment rate dampened expectations for further interest-rate hikes. Australia’s seasonally adjusted unemployment rate edged up to 4.5% in April 2026, exceeding both March’s reading and market expectations of 4.3%. The latest figure marked the highest unemployment rate since November 2021. Meanwhile, employment fell by 18,600 to 14.74 million in March 2026, missing market expectations for a 17,500 gain and marking the first decline since November. This prompted investors to scale back expectations that the Reserve Bank of Australia will raise the cash rate to 4.6% in June, following three consecutive rate hikes. Adding to the bearish tone, preliminary data showed the Manufacturing PMI eased to 50.3 in May from 51.3 in April, while the Services PMI slipped into contraction territory at 47.7 from 50.7 previously.

AUDUSD decreased to 0.71, the lowest since April 2026. Over the past 4 weeks, Australian Dollar US Dollar lost 1.06%, and in the last 12 months, it increased 10.56%.

The Australian dollar depreciated past $0.70 on Wednesday, extending losses from the previous session and hitting its lowest level since mid-April, as the Reserve Bank of Australia’s meeting minutes failed to deliver a clear hawkish signal on the policy outlook. The policy board believes it now has room to pause further hikes while remaining focused on preventing any rise in inflation expectations. The central bank’s economists noted that the board is assessing the cumulative impact of three cash rate increases this year, as well as external uncertainties, including the ongoing Middle East conflict. A senior economist at Commonwealth Bank of Australia said markets increasingly expect the Reserve Bank of Australia to hold rates steady at its June meeting, with investors pricing in one additional move to around 4.60%. On the domestic front, the Westpac–Melbourne Institute Consumer Sentiment Index rose 3.5% month-on-month in May to 83, rebounding from April’s 2½-year low of 80.1.