Insights 
VT 
Australia will release its September monthly employment report at 0:30 GMT. The report is expected to show a modest increase, with the addition of 17,000 new jobs.
The unemployment rate is forecast to remain at 4.3%. This pattern of subdued growth has been consistent in recent months.
September Employment Figures Released
The September employment figures have just been released, coming in slightly weaker than anticipated at 15,000 new jobs and an unemployment rate ticking up to 4.4%. This confirms the trend of a cooling labor market we have seen develop over the last quarter. Consequently, market expectations for another Reserve Bank of Australia rate hike before year-end are rapidly diminishing.
For traders looking at the Australian dollar, this data reinforces a bearish outlook. We believe buying AUD/USD put options with expiries in December 2025 offers a strategy with defined risk to capitalize on further weakness. This view is supported by recent data showing a slowing in China’s industrial production, a key market for Australian exports.
On the interest rate front, the tepid jobs growth suggests positioning for a dovish RBA stance. Traders could consider using interest rate swaps to bet that the official cash rate will remain at its current level through the first quarter of 2026. This reflects a significant shift from just a few months ago, when the market was pricing in at least one more rate increase.
Market Implications and Strategies
Given that the latest Q3 2025 inflation report showed core CPI still sticky at 3.1%, the RBA is in a difficult position. This central bank uncertainty can increase market volatility, making long volatility strategies attractive. Buying AUD/USD straddles for the coming weeks could be a prudent way to trade the potential for a sharp move, regardless of the direction.
We remember a similar dynamic back in late 2023 when softening labor data caused a sharp repricing of RBA expectations and a decline in the Aussie dollar. That period saw rate-sensitive sectors on the ASX 200 rally on the prospect of lower rates for longer. Therefore, call options on Australian real estate or banking sector ETFs could also present an opportunity in the weeks ahead.
