Hot Jobs Report Slams Door on Fed Cut

AUD

Quiet conditions see the Aussie Dollar kick off Friday mixed against the majors. Asian equities ended the day mixed, Shenzhen +0.6%, Nikkei +0.1% and Hang Seng -0.8%. Locally the ASX finished the day relatively unchanged, despite solid gains from the materials sector +3%. Yesterday, China's Caixin Services PMI printed at 50.6 (exp. 51.0, prev. 51.1), indicating the services sector expanded again at the end of Q2 2025. That said, rates of both business activity and new order growth eased since May, while job cutting was recorded for the third time in the past four months. Overall, sentiment remained positive, but historically subdued. The next key event will be the Reserve Bank of Australia's interest rate decision on Tuesday. With headline CPI at 2.1% year-on-year (the RBA targets 2-to-3%) and softer consumer spending, the central bank is largely expected to lower the Cash Rate by 25bps to 3.6%. On the other hand, some expect the RBA to hold out until August, waiting to see the key quarterly CPI print on July 30 (The RBA's preferred inflation gauge). 
 

USD

The AUDUSD slipped overnight, touching 0.6536 lows before settling at 0.6571, with the greenback firming off the back of a stronger-than-expected jobs report. Nonfarm payrolls increased a seasonally adjusted 147k in June, higher than 110k estimates and just above the upwardly revised 145k in May. The Unemployment Rate surprisingly tightened to 4.1% and Average Hourly Earnings ticked up 0.2% month-on-month. Government jobs accounted for a large portion (73k) of the employment change, although market pricing still shifted following the report, with traders all but taking the chance of a July rate cut from the Fed off the table as the US labour market remains resolute. US stocks closed in the black on a holiday shortened session with the Dow and S&P +0.8% and the Nasdaq +1%. No US economic data ahead for the July 4 Independence Day public holiday. Next week will be a relatively quiet week for US data, with the FOMC Meeting Minutes on Thursday.
 

EUR

AUDEUR hit one-week highs of 0.5594 overnight, retracing a little to open flat one yesterday at 0.5588. The DAX gained +0.6% and CAC +0.2%. It's been a quiet week for Eurozone economic data. Later today, we'll see PPI, where producer prices are expected to have fallen for a third straight month. 
 

GBP

AUDGBP gained almost 1% in the early hours yesterday with the Pound weakening significantly in the face of increased political instability in the UK. There's been a slight retracement since, with the pair gradually falling throughout the session to kick off today lower at 0.4812. The FTSE gained +0.6%. Tonight, MCP Member Taylor will speak at the London School of Economics. We'll also the UK Construction PMI.
 

NZD

AUDNZD opens a little higher at 1.0826 after touching 5-week highs of 1.0844 overnight. The next major event will be the RBNZ Official Cash Rate decision and Rate Statement on Wednesday.