Insights 
VT 
In July 2025, Australia’s full-time employment numbers saw an increase, with 60,500 jobs added. The unemployment rate stayed unchanged at 4.2%, meeting forecasts. Conversely, there was a decrease of 36,000 in part-time employment.
Recent wage data shows a quarter-on-quarter rise in the Wage Price Index by 0.8%, which adheres to predictions. This stability in wages follows the recent jobs report, creating a more comprehensive view of the labour market’s health.
The Impact of Employment and Wage Reports
The employment and wage reports suggest the Reserve Bank of Australia (RBA) might consider slowing down rate cuts. The RBA’s decisions on rate adjustments have been carefully considered, and the new data aligns with their past evaluations. This could influence a cautious stance on further rate reductions.
The Australian dollar has strengthened on the back of this strong jobs report, which adds to a picture of economic resilience. We see value in buying near-term call options on the AUD/USD, betting on further upside as the market prices out imminent rate cuts. This move is supported by the sustained jump in full-time employment, a key metric for the Reserve Bank of Australia.
This situation feels similar to late 2023, when stronger-than-expected inflation and jobs data consistently pushed back the timeline for RBA easing. During that period, the AUD/USD rallied over 7% between October and December as rate cut bets unwound. We anticipate a similar, though perhaps more moderate, upward drift in the currency through September 2025.
The RBA’s Future Decisions
The jobs and wages data suggest the RBA will hold the cash rate at its current 4.35% level for longer than previously anticipated. This makes shorting Australian 3-year government bond futures an attractive position for the coming weeks. As expectations for rate cuts in the fourth quarter diminish, we expect bond yields to rise, causing the price of these futures to fall.
The RBA’s own commentary has highlighted that its decisions are “finely balanced,” creating uncertainty around the timing of any future policy moves. Given this, we think implied volatility on the Aussie dollar is underpriced, with options markets yet to fully digest this hawkish data. Buying straddles on the AUD/USD could be profitable, as they benefit from a large price move around the next RBA meeting, regardless of the direction.
Currently, overnight index swaps (OIS) are pricing in a 40% chance of a 25-basis-point cut by the November 2025 RBA meeting. We believe this new employment data will push that probability down below 20% in the coming trading sessions. This repricing will support our view of a stronger dollar and higher front-end yields.
