The US dollar was on slippery ground again on Thursday after stronger-than-expected Australian jobs data boosted the Australian dollar and fuelled general selling in the greenback. Australian data beat expectations for a fall in jobs in September, with 40,600 positions created instead, and the Aussie jumped to a fresh 14-month high against the US currency as markets anticipated more rate hikes to come.
The Aussie's gains fed through to other currencies and the dollar fell to a 14-month low against the New Zealand dollar and slid within range of Wednesday's eight-month low at 88.01 yen. "Dollar demand is expected down there (at 88.01 yen). But the weak US dollar is a major story for the market and it's a matter of time. Dollar/yen is getting gradually lower," said a senior trader at a European bank.
The prospect of US interest rates remaining low for a while has undermined the dollar across the board, making it a possible funding currency for higher-yielding assets and bringing it within range of January's 13-year low of 87.10 yen. The US currency slipped 0.4 percent from late New York levels to 88.30 yen. Traders said there was talk of dollar buying at Wednesday's low to protect options barriers, with some short covering when it failed to break that level.
Recent comments from Japanese Finance Minister Hirohisa Fujii have also encouraged the market not to expect yen selling intervention at these levels, with Japan's stock market stable and market volatility not particularly high. However, Fujii warned on Wednesday that he may act if moves became "abnormal".
The dollar index, a measure of the greenback against six major currencies, hovered at its lowest in two weeks, not far off its 2009 low set in September at 75.827. The Australian dollar jumped more than 1 percent on the day to $0.9035 and bill futures slid as the jobs data prompted the market to price in a real risk of more hikes in the 3.25 percent cash rate after an increase this week.
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