The AUD/USD pair jumped 0.7% to $0.6411, rebounding sharply from its weakest levels since November 2023. 

The spike in the currency came after labor data for November showed a stronger-than-expected increase in the total number of employed people, while Australia’s unemployment rate unexpectedly slid to 3.9% from 4.1%. 

The reading signaled that Australia’s labor market remained robust, undermining expectations for interest rate cuts by the RBA. Traders were seen sharply scaling back bets that the central bank will cut rates in February 2025, with general consensus shifting more towards a cut in the second quarter. 

“We expect the first rate cut to occur in May 2025. Softer economic data from the recent national accounts release raised the risk of a February cut, but this labour market result offsets that risk somewhat,” ANZ analysts wrote in a note. 

Peer Westpac also expects the RBA to begin cutting rates from May, in what is expected to be a shallow easing cycle.

The RBA had left rates unchanged at a meeting earlier this week, but struck a slightly less hawkish chord in the face of softening economic growth in the country. 

But the bank offered scant cues on when it plans to begin cutting rates, citing concerns over sticky inflation and strength in the labor market.