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    In December, Australia’s employment increased by 65,200, exceeding the expected rise of 30,000.

    by VT Markets
    /
    Jan 22, 2026
    Australia saw job growth in December, adding 65.2K jobs, far surpassing the expected 30K. The unemployment rate stayed steady at 4.5%. This surprising job growth shows the strength of the Australian labor market.

    Part-Time and Full-Time Job Growth

    Part-time jobs rose by 41K, while full-time jobs increased by 24.2K. The labor force participation rate climbed slightly to 66.2%, meaning more people are looking for work than in previous months. The December 2025 employment data came in much stronger than expected, indicating a robust labor market. This reduces the chances of an interest rate cut soon from the Reserve Bank of Australia (RBA). We now expect rates to stay higher for a longer time, with any cuts likely postponed to 2026. In the rates market, traders are selling off bond futures, which is driving yields up. The expectation for a rate cut by the RBA’s May meeting has dropped from about 50% last week to under 15% today. Consider using options to bet on the cash rate remaining at or above its current level of 4.35% in the first half of the year.

    Hawkish Shift and Market Reactions

    This hawkish shift is beneficial for the Australian dollar, as higher yields attract investments. We’re already seeing the AUD/USD spot rate rise, and buying call options on the Aussie dollar seems like a smart move for the upcoming weeks. This situation recalls the unexpected inflation reports in late 2024, which led to a quick market revaluation and a sustained rise in the currency. For stocks, the news brings uncertainty, likely increasing market volatility. While a strong economy can enhance corporate earnings, the risk of ongoing high-interest rates could negatively impact company valuations and borrowing costs. Therefore, we expect ASX 200 index futures to face challenges, and buying put options for downside protection may be wise for current long positions. Create your live VT Markets account and start trading now.

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