The Australian dollar rose smartly against all major currencies on Thursday after stunning jobs data boosted bets on an almost certain chance of an interest rate rise in February. Bill and bond futures skidded after a labour report showed 35,200 jobs were added in December, soaring over three times that of market estimates. Unemployment dipped to 5.5 percent, from November's 5.7.
Analysts said the solid growth in jobs suggested unemployment has peaked and the labour market was set to grow steadily. That should keep the pressure on the Reserve Bank of Australia (RBA) to raise rates again. "I had thought the labour market was looking pretty good but even my optimistic jaw dropped when I saw these numbers come up," said Adam Carr, an analyst at ICAP.
The rise brought job gains in the past four months to a whopping 135,700, with most of those full-time. That encouraged investors to bet on a three in four chance that rates will rise another 25 basis points to 4.0 percent at the RBA's February 2 policy meeting. Further hikes are expected to take rates to 5.0 percent by year-end. The Aussie jumped on the yen to 85.29, from 84.07 seen here late Wednesday, the sharpest daily rise in a week. The rise was exaggerated by stop-loss buying kicking in at 84.75, one trader said.
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