SYDNEY: The Australian dollar fell on Thursday after a soft jobs report narrowed the odds of a rate cut in May, while the kiwi failed to draw much support from data showing its economy has crawled out of a recession given significant pockets of weakness.
The Aussie slipped 0.3% to $0.6339, having ended the session overnight largely unchanged. It now faces resistance at $0.6391 and $0.6409.
The kiwi dollar fell 0.5% to $0.5788, after finishing Wednesday also little changed.
It has run into some resistance after hitting a new 2025 high of $0.5831 on Tuesday.
Overnight, the Federal Reserve held interest rates steady as widely expected, although policymakers are still projecting two rate cuts this year despite some inflationary impact from US tariffs.
Wall Street cheered and the dollar pared gains along with lower Treasury yields.
Earlier in the day, data showed Australian employment unexpectedly fell in February to end a strong run of impressive gains, but the jobless rate remained low at 4.1% thanks to a pullback in the participation rate.
Investors increased the chance of a rate cut in May to 78% from 70% previously and added 6 basis points to a total of 67 bps of easing this year.
“The combination of falling employment and participation means this is a ‘soft’ jobs report,” said Gareth Aird, head of Australian economics at the Commonwealth Bank of Australia.
While Aird does not believe the RBA will be swayed by one weak jobs report, he said another soft monthly inflation report next Wednesday could make the April meeting a live affair.
Over in New Zealand, data showed its economy crawled out of a recession and grew at a faster than expected clip of 0.7% last quarter.
Australian dollar steadies, gets limited lift from strong jobs data
Expectations of policy easing have been intact with swaps implying 60 bp of easing - between two or three rate cuts - for this year.
“While headline growth was stronger than the RBNZ’s forecast, it’s worth remembering that the expansion in Q4 followed two quarters of sharp contraction,” said analysts at ANZ, referring to the Reserve Bank of New Zealand.
“Given the starting point, we think there’s plenty of scope for the economy to grow quickly in the near term without adding upwards pressure to inflation.”
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