The Australian labor market data published on Thursday supported the Australian dollar. Buyers of the AUD/USD pair again approached the 71-figure, but were forced to retreat against the overall strengthening of the greenback.

However, the "Australian Non-Farms" will still make their presence known—after all, the report published on Thursday increased the likelihood that the Reserve Bank of Australia will tighten monetary policy at one of the spring meetings. Recent macroeconomic releases signal that inflation in Australia is accelerating and that labor market tensions remain. If these trends persist, the RBA may raise interest rates in May, following the release of CPI growth data for the first quarter of the current year.

According to the data, the unemployment rate in Australia remained at December's level of 4.1% in January, while most analysts had forecast an increase to 4.2%. The employment growth figure fell slightly short of the forecast (20,000), but remained positive at 17,800. The total number of employed people reached a new historical high of 14.7 million.

It's also important to note one significant aspect. The structure of this indicator shows that overall growth was driven by the full-time employment component (+50,500), while part-time employment showed a negative trend (-32,700). This is indeed an important point, as it indicates that employers are expanding their workforce not through temporary or "project" contracts, but by creating stable jobs, reflecting confidence in future demand. The sustained growth in full-time jobs (this component has been rising for the second consecutive month) enhances household incomes, positively affects consumer activity, and, consequently, establishes a more solid foundation for economic growth. However, from the RBA's perspective, such dynamics signal ongoing labor-market tension and potential wage pressure. This means it serves as another argument for tightening monetary policy.

The labor force participation rate remained high at 66.7% (close to historical highs), indicating that people are not leaving the labor market—they are actively seeking work or already employed.

It's worth noting that the year-on-year trimmed-mean CPI was 3.4% in Q4, while the overall CPI was 3.6%. Both indicators are accelerating, exceeding the RBA's target level. Furthermore, this dynamic reflects ongoing pressure from domestic demand and rising labor costs. Together with the latest report, these data signal to the Bank that inflation is on an upward trajectory, strengthening the case for tightening monetary policy.

Despite such a "clearly hawkish" fundamental picture for the Aussie, the AUD/USD pair was unable to consolidate within the 71-figure range. The culprit was the Unemployment Claims report, which came in well above expectations. The number of new unemployment claims unexpectedly dropped to 206,000, after lingering around the 230,000 mark for two weeks. Notably, throughout January, this indicator fluctuated between 199,000 and 209,000, but began to gain momentum in early February. However, Thursday's result alleviated traders' concerns, leading to support for the dollar across the market.

Still, it's too early to write off the Aussie—the short positions on the AUD/USD pair appear risky. The likely divergence in monetary policy between the RBA and the Federal Reserve will continue to provide background support for the Aussie and, consequently, for AUD/USD buyers.

Recall that RBA Governor Michelle Bullock stated the week before last that the central bank is prepared to raise interest rates again "if inflation proves persistent and the labor market remains tight." In this context, she concluded that the outcomes of upcoming meetings will depend on incoming data. A similar rhetoric was expressed last week by RBA Deputy Governor Andrew Hauser. According to him, inflation is "too high," while the central bank is prepared to do "whatever is necessary to bring it down to the target level."

All of this suggests that the central bank will resort to raising interest rates at the May meeting if the labor market maintains its current trajectory and the CPI in the first quarter remains above the 3% level.

Therefore, downward price dips should be viewed as opportunities to open long positions with the first (and currently only) target of 0.7080 (the upper line of the Bollinger Bands indicator on the 4-hour chart). It is premature to talk about a return to the 71-figure area—everything will depend on the dynamics of US GDP and the core PCE index. Relevant reports will be released very soon—on Friday, February 20.