AUD/USD climbs as inflation concerns intensify, ASX 200 momentum fades

Australian Labour Market Remains Resilient Amid Rising Inflation Expectations

The Australian job market continues to demonstrate strength, while expectations for inflation are on the rise. This combination is increasing the likelihood that the Reserve Bank of Australia will adopt a more restrictive monetary policy stance. As a result, the Australian dollar is gaining ground against the US dollar, surpassing important resistance levels and signaling potential for further gains.

However, the prospect of higher interest rates is putting pressure on the equity market. The ASX 200 index is facing challenges at resistance, as elevated yields, valuation concerns, and waning momentum are tilting risks to the downside.

The latest labour market data for March aligned perfectly with analysts’ forecasts. The unemployment rate remained steady at 4.3%, which is consistent with the RBA’s projection for the first half of 2026. Employment figures also showed an increase, reflecting ongoing stability in the workforce.