The data revealed a 32.6K increase in employment in June, more than double the market consensus, which followed a large 76.5K increase in May. The decision of the RBA to hold steady with rates on 4th July was deemed to be a ‘hawkish hold’ with the guidance indicating that further tightening ‘may be required’. This would be dependent on the incoming economic data and based on that guidance it certainly increases the prospect of a 25 bps rate hike on 1st August. 

We do still have the Q2 inflation data next week before that meeting so a rate hike is not a done deal and a much softer CPI print could persuade the RBA to remain on hold.

Given the jobs data, and given we already assumed another hike after a July pause, we see it as more likely that the RBA hikes which should help provide support for AUD over the coming weeks.