By December, the Australian labour market had turned the corner. The unemployment rate immediately fell to 4.1%, a decrease from 4.3% in the month of November. This change surprised analysts on the market, who had forecast an unemployment rate of 4.4%. Global markets boomed to record highs as trade war fears between the U.S. and E.U. dissipated. At present, investors have been treated to a more congenial atmosphere as they await crucial economic data from the US.
Australian Employment Figures
In December, the Australian Bureau of Statistics announced the unemployment rate fell to 4.1%. This is an encouraging, though dramatic, decrease from last month. This drop is big because a fall in the unemployment rate usually indicates an improving labor market and offers an optimistic view of the Australian economy.
Analysts were anticipating a worse outcome, with average forecasts looking for an unemployment rate of 4.4%. Stronger-than-anticipated numbers would require a re-think on the outlook for the economy. Specifically, they can affect the monetary policy stance decided upon by the Reserve Bank of Australia.
Building upon these encouraging employment headlines, the Australian dollar (AUD) rallied strongly. It traded as high as 0.6800, its strongest since October 2024, and was up around 0.7% on the day. This bullish sentiment may be a reflection of increasing optimism among investors about the strength of Australia’s economic rebound.
US Economic Data on the Horizon
In addition, as the week’s events continue, all eyes will be looking ahead to the next set of release from the US Bureau of Economic Analysis. According to recent reports, the agency is preparing to release a revision of its third-quarter Gross Domestic Product (GDP) data. Additionally, it will be releasing the Personal Consumption Expenditure (PCE) Price Index figures for October and November.
Investors have largely been focused the core measures of inflation. These figures will allow them to judge the economy’s firmness and foresee any possible changes to monetary policy. Core inflation is a preferred measure of inflation by central banks who target an average inflation rate of 2%. When core Consumer Price Index (CPI) figures surpass this threshold, it often prompts central banks to consider increasing interest rates to control inflation. On the flip side, a drop below this threshold could trigger interest rate cuts.
Additionally, the weekly initial jobless claims data will add more detail to the overall labor market health. Analysts are looking for these numbers to provide more insight on the continuing strength in the employment market and the shift in consumer spending patterns in the US economy.
Market Reactions and Currency Movements
The gulf between United States and European Union antitrust policy has closed dramatically. This change is helping to maintain a more bullish market sentiment as the week wears on. After some short-term speculation, investors are once again showing confidence in the U.S. economy, as seen in the strengthening dollar and other currencies.
The GBP/USD rate was steady above the 1.3400 level in early Thursday European trading, after corrections on Wednesday. At the same time, USD/JPY has picked up leg—sliding toward 159.00 in early trade on Thursday—as a powerful bid emerges for the safe-haven Japanese yen.
Gold also proved surprisingly resilient, having retreated from its all-time-high close near $4,890 set earlier in the week. It closed Thursday trading flat above $4,800, indicating continued stability in rising bull market conditions. This trend is a clear indicator that investors can’t get enough of gold, and that they’re still turning to the safe haven asset in times of uncertainty.
Alongside these other positive signals, US stock index futures were pointing a little higher early Thursday. This increase is a sign of increasing investor confidence about long-term economic recovery and a degree of stabilization in financial markets.