Australian Dollar Falls Toward 0.7100 As Unemployment Rate Climbs In April

AUD/USD depreciates after registering over 0.5% gains in the previous day, trading around 0.7120 during the Asian hours on Thursday. The pair depreciates as the Australian Dollar (AUD) declines following the release of softer Australian labor market data.

Australia’s Unemployment Rate rose to 4.5% in April, up from 4.3% in March. This figure came in above the market consensus, which had predicted the rate to hold steady at 4.3%. Meanwhile, the Employment Change dropped by 18.6K jobs in April. This decline followed a revised increase of 23.3K jobs in March and fell significantly short of the consensus forecast, which had anticipated a gain of 17.5K jobs.

A surprise jump in the unemployment rate and a net loss in jobs suggest the labor market is finally buckling under the weight of previous rate hikes. Traders may quickly dial back expectations for further Reserve Bank of Australia (RBA) rate hikes.

S&P Global reported that the preliminary reading of Australia's Manufacturing Purchasing Managers’ Index (PMI) declined to 50.3 in May from 51.3 in April. The downturn was even more pronounced in the service sector, where the Services PMI eased to 47.7 in May from 50.7 in April, sliding into contractionary territory. Consequently, the Composite PMI fell to 47.8 in May, down from the previous month's reading of 50.4.

The AUD/USD pair also struggles as the US Dollar (USD) remains firm as traders monitor the economic implications of peace negotiations between the United States (US) and Iran, alongside heightened threats to the critical Strait of Hormuz shipping lane.

A Bloomberg report on Wednesday indicated that US President Donald Trump characterized the ongoing negotiations with Iran as being in their final stages. However, President Trump also reiterated a firm pledge to resume military actions within days if Iran rejects his terms. In response, Iranian President Masoud Pezeshkian emphasized that Tehran has no intention of capitulating, stating on the social media platform X that attempting to force a surrender through coercion is nothing more than an illusion.