The AUD/USD has fallen because of disappointing job loss numbers in August. The Employment Change showed a decrease of 5.4K jobs, while experts expected an increase of 22.0K jobs. Last month, the gain was 24.5K. In August 2025, the jobless rate was 4.2%, which met predictions. However, the job losses impacted the Australian dollar. The drop of 5.4K jobs—compared to an expected gain of 22K—and a loss of 40.9K full-time jobs worsened the situation.

Weak Employment Report

The employment report is considered weak based on the results. This poor report has changed our view on what the Reserve Bank of Australia might do next. The market quickly ruled out any chance of a rate hike this year and is now focusing on possible cuts in 2026. The RBA’s meeting in early October will be crucial for future guidance. Given this scenario, traders might consider buying AUD/USD put options. These options allow you to manage risk while benefiting if the currency weakens further in the fourth quarter. Another strategy could be selling out-of-the-money call spreads, which profit from a declining price and time decay. The situation is even more pronounced when we consider the policy differences with the United States. The Federal Reserve is likely to keep rates steady at 5.25%. With Australia’s cash rate at 4.35% and a weakening labor market, the interest rate gap is likely to widen in favor of the U.S. dollar. This fundamental change is expected to keep pressure on the AUD/USD pair.

Commodity Market Impact

We are also facing challenges from commodity markets that weaken the Australian dollar. Iron ore prices, a vital export, have dropped by over 10% in the last month, now trading below $95 per tonne. This decline in a major income source supports the negative economic outlook indicated by the jobs data. We anticipate that implied volatility in AUD/USD options will rise in the coming weeks as uncertainty surrounding the RBA’s decisions grows. Historical data shows that sharp declines in labor numbers often lead to prolonged currency weakness and increased volatility. Thus, long volatility strategies could be advantageous as the market absorbs this new information. Create your live VT Markets account and start trading now.

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