Australia’s job market exceeded expectations in October, reducing the immediate need for the Reserve Bank of Australia (RBA) to cut interest rates. This resulted in a stronger Australian Dollar (AUD), with forecasts indicating it could reach 0.68 by mid-2026. The latest job data revealed a drop in the unemployment rate to 4.3% from 4.5% the previous month, signaling that the earlier increase was just temporary. The economy gained momentum by adding 42,000 jobs, primarily in full-time roles.

Currency Trend Expectations

As the likelihood of further rate cuts decreases, the AUD is on the rise. Analysts predict there will be only one additional rate cut in 2026. They believe the Australian Dollar will be a strong contender among G10 currencies as we enter the new year. The FXStreet Insights Team provides valuable market observations from both commercial and independent analysts. These insights help deepen our understanding of market trends and future economic developments. The robust job data for October has changed our outlook on the RBA’s direction. With the unemployment rate unexpectedly falling to 4.3%, the argument for immediate rate cuts has weakened significantly. This suggests the central bank may stay on hold for a longer time.

Strategic Considerations for Traders

This job report is consistent with other recent data, including the third-quarter inflation rate of 3.1%, slightly above what the market anticipated. Given the ongoing inflation concerns from 2023-2024, the RBA is likely to be cautious about easing policies too soon. This strengthens the case for maintaining the current stance into the new year. For derivatives traders, a bullish outlook on the Australian Dollar seems appropriate. There’s growing interest in buying AUD/USD call options with strike prices around 0.6700, set to expire in the first quarter of 2026. This approach allows traders to take advantage of expected price increases while managing risk. To control costs, traders might consider bull call spreads—buying a 0.6600 call and selling a 0.6800 call for March 2026 expiration. This strategy benefits from a gradual rise in the currency, which aligns with our base case. The recent data surprise likely caused a temporary increase in implied volatility, making spreads more appealing compared to straight positions. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now