Australia’s labour market is still strong. Unemployment is 4.1%, and 17,800 new jobs were added. This backs the Reserve Bank of Australia’s recent rate rise.
Wage growth is still weak, and low unemployment has not led to faster pay rises. Trimmed mean inflation in the last quarter was 3.4% year-on-year, so real wage growth in Q4 2025 was 0.
Outlook For RBA Policy And The Aussie Dollar
Commerzbank expects just one more interest rate increase from the central bank. It says current market pricing is too optimistic, which could limit further gains in the Australian dollar in the months ahead.
Australia’s labour market looks very strong, and that should support the Aussie dollar. In late 2025, unemployment stayed at a historically low 4.1%, while the economy continued to add a solid number of jobs. This strength has kept expectations for more RBA rate hikes high.
However, we remain cautious because low unemployment is not producing strong wage growth. Last quarter, wage growth was 3.4%, the same as trimmed mean inflation. That means real wage growth was zero. This is unlikely to create new inflation pressure.
In our view, this points to only one more rate rise from the RBA. But interest rate swap markets are pricing in at least two more hikes by the end of 2026, which seems too optimistic. Because of this gap, the Australian dollar may have limited upside in the coming months.
Derivatives Positioning Ideas
For derivatives traders, this suggests AUD/USD rallies may fade. One possible approach is to sell call options or take short positions on rebounds toward the 0.6800 level. Another option is to buy AUD puts with a strike below 0.6600, aiming to benefit if the market scales back its optimistic rate expectations.
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