Last week, the Reserve Bank of Australia cut the interest rate by 25 basis points and announced further steps in this direction – "if economic conditions allow." A day later, key data on Australian labor market growth were released, leaving more questions than answers regarding the outlook for further monetary easing. This is precisely why the AUD/USD pair is showing sideways movement, reflecting indecision from both buyers and sellers. The U.S. dollar has also frozen in anticipation of the key event of the week – Federal Reserve Chair Jerome Powell's speech at the Jackson Hole Economic Symposium (which begins on Thursday, August 21). "Uncertainty" is the most accurate description of the current situation in the AUD/USD pair.

But let us start with the "Australian NonFarms." Not July's, but June's. Recall that in June, the unemployment rate in Australia rose to 4.3% – the highest since November 2021 – while employment increased by only 2,000 (the forecast was +20,000). At the same time, full-time employment fell by nearly 40,000, while part-time employment surged by more than 40,000.

This result suggested that the RBA would cut the interest rate in August, especially against the backdrop of slowing inflation in the second quarter. Annual CPI slowed to 2.1%, its lowest level since Q1 2021, compared with 2.4% in the previous two quarters.

In other words, the weak labor market report complemented the inflation data, creating all the conditions for an interest rate cut at the August meeting.

Now the situation has essentially "reset." It is clear that in the three remaining meetings this year (the first of which will be held on September 30), the central bank will assess inflation and labor market dynamics in the second quarter when making its rate decision.

In this context, the latest (July) labor market report allows the RBA not to rush with the next rate cut. According to data released last Thursday, the unemployment rate fell as expected – from 4.3% to 4.2%. Employment in July increased by 24,500, almost in line with the forecast of 25,300. However, the previous month's figure was revised downward, from 2,000 to 1,000.

At the same time, full-time employment grew by 60,000, while part-time employment dropped sharply into negative territory (-36,000). The labor force participation rate stood at 67.0%. This indicator entered the "red zone," as most analysts had expected a slight increase to 67.1%.

What does this report indicate? A few key points should be highlighted:

First, unemployment is not showing an upward trend, while the labor force participation rate remains stable (for the third month in a row at 67.0%).

Second, the increase in full-time employment stands out. This signals that employers are creating more stable, long-term jobs. Labor demand is high, especially in sectors requiring full-time staff. Moreover, robust growth in full-time employment increases competition for workers, which in turn pushes wages higher. This is one of the most important indicators closely monitored by the RBA when assessing inflation risks.

In other words, the July report showed that Australia's labor market remains strong and resilient. This fact allows the central bank not to rush with a rate cut – at least not at the September meeting.

Nevertheless, despite this outcome, the "Australian NonFarms" provided only limited and temporary support to AUD/USD buyers. The reason lies in U.S. CPI and PPI reports, where nearly all components came in "green." This suggests that Fed Chair Jerome Powell may adopt a more hawkish tone during his Jackson Hole speech, advocating for maintaining a pause at the September meeting. Such expectations provide background support for the greenback, and therefore for AUD/USD sellers.

The contradictory fundamental backdrop makes it impossible to speak of either buying or selling the pair confidently. In such uncertain conditions, it is advisable to take a wait-and-see position.

The technical picture supports the same view. On the daily chart, the AUD/USD pair is located on the middle line of the Bollinger Bands indicator, within the Kumo cloud, between the Tenkan-sen and Kijun-sen lines. On the four-hour chart, the pair is also in the Kumo cloud, between the middle and lower lines of the Bollinger Bands. All this suggests that traders have not yet determined the direction of price movement – it is not possible at this stage to prioritize long or short positions.