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Australian dollar rises as unemployment rate falls to 5.2% in September

The Australian dollar strengthened against its U.S. counterpart as data showed the seasonally adjusted unemployment rate falling to 5.2% in September from 5.3% in August.

The number of employed persons rose by 14,700 to 12,944,000 in seasonally adjusted terms in September, according to the Australian Bureau of Statistics. Full-time employed persons increased by 26,200 to 8,847,200, while the number of unemployed people fell by 8,100 to 709,600. The participation rate fell 0.1 percentage points to 66.1%.

The Australian dollar traded 0.40% higher against its U.S. dollar as of 9:48 p.m. ET on Oct. 16.

The Reserve Bank of Australia earlier this month cut the cash rate by 25 basis points to a fresh record low of 0.75% while signaling that rates could fall further in order to drive inflation higher and support growth. RBA Governor Philip Lowe said at the time that employment growth is expected to slow, while the rate of wage increase remains subdued.

The unemployment rate is expected to climb to 5.5% by early next year, said Marcel Thieliant, senior economist at Capital Economics, in a note. He added that the RBA is expected to cut interest rates to 0.5% in December.

"And as inflation falls further below target, we think it will follow up with another cut to 0.25% by early next year and will eventually launch quantitative easing," Thieliant said.