AUD/USD Forecast: Messy Jobs Report Fails to Shift Focus from Energy Price Surge
Author: David Scutt, Market Analyst
Date: March 18, 2026
Overview
The latest Australian jobs report presents a complex picture, with conflicting signals regarding employment, hours worked, and participation rates. Despite the noise in the data, market attention remains focused on inflation and its implications for the Reserve Bank of Australia (RBA) policy.
Key Findings from the Jobs Report
Employment Changes: Employment increased by 49,000 in February, but the rise was primarily due to a 79,000 increase in part-time jobs, while full-time employment decreased by 30,000. This shift indicates a potential decline in labor utilization.
The unemployment rate rose to 4.3%, driven by a higher participation rate of 66.9%, largely due to older Australians remaining in the workforce. The report suggests that the increase in unemployment is more a result of supply factors rather than a decrease in demand for labor.
Broader Labor Market Conditions
Despite the mixed signals from the jobs report, broader labor market indicators remain stable. Underemployment is steady at 5.9%, and the trend unemployment rate has slightly decreased to 4.2%. These figures align with the RBA's forecasts, which expect an average unemployment rate of 5.3% in the first half of 2026.
Inflation and Market Reactions
Market participants largely overlooked the details of the jobs report, instead focusing on rising inflation expectations driven by surging energy prices linked to geopolitical tensions in the Middle East. This has led to increased pricing for a potential RBA rate hike in May, with implied odds exceeding 65%.
AUD/USD Movement
Following a significant drop due to rising energy prices, the AUD/USD pair rebounded in Asian trading, correcting from its earlier lows. The pair found support around 0.7020 and moved towards 0.7050, with key resistance levels identified at 0.7090 and 0.7100.
Technical indicators suggest that while downside pressure may be easing, risks remain. The Relative Strength Index (RSI) is showing higher lows, and the Moving Average Convergence Divergence (MACD) is approaching the signal line, indicating a potential stabilization in the AUD/USD pair.
Conclusion
In summary, while the Australian jobs report presents a mixed picture, the focus remains on inflationary pressures and their implications for monetary policy. The AUD/USD pair's movements reflect broader market sentiments influenced by external factors, particularly energy prices and geopolitical developments.