AUD/USD holds above 0.6600 despite weak jobs report - BBH

AUD/USD is steady above 0.6600 after Australia's August labor market report showed unexpected job losses and a sharp drop in full-time employment, raising doubts about the RBA's ability to maintain a gradual easing pace, BBH FX analysts report.

Australia loses jobs in August as full-time employment drops sharply

"AUD/USD edged lower but is holding above key support at 0.6600. Australia's August labor force report was unexpectedly weak. The economy lost -5.4k jobs (consensus: +21.0k) vs 26.5k in July, driven by a -40.9k decline in full-time employment (vs. +63.6k in July). Part-time employment increased 35.5k, reversing July's loss."

"The unemployment rate was unchanged at 4.2% for a second consecutive month in August but the drop in the participation rate and decline in hours worked signal slack is building beneath the surface."

"The RBA has flagged that the pace of decline in the cash rate will largely be driven by labor market conditions. Today's soft jobs report weakens the case for a gradual RBA easing path and is a headwind for AUD. For now, RBA cash rate futures continue to imply 50bps of easing over the next twelve months and the policy rate to bottom near 3.10%."