The Australian dollar held broad gains on Thursday, having recovered from a brief wobble in the wake of soft jobs data, while the New Zealand dollar edged up on improving risk appetite. The Australian dollar had initially dipped half a US cent as data showed a net 7,900 jobs were lost in January against forecasts of a rise of 15,000. The jobless rate also surprised with an increase to 6 percent.
Yet it quickly recovered to $0.7169 as analysts doubted the data alone would alter the Reserve Bank of Australia's (RBA) long-standing reluctance to ease policy further. "It's dangerous to read too much into one month's worth of jobs data and in any case various labour market indicators still suggest that the jobs market is solid," said Shane Oliver, chief economist at AMP Capital.
"So there is unlikely to be anything in these numbers to move the RBA's dial on interest rates just yet." The market seemed to agree and interbank futures still imply almost no chance of a rate cut from the RBA next month. The probability increases to around 50-50 by May. The Aussie had already rallied by more than 1 percent overnight after a jump in oil prices underpinned the commodity currency block. A break above $0.7187 would target $0.7242.
The Aussie also stood tall against the euro, yen and sterling having risen more than one percent against each unit. But it could not beat the New Zealand dollar at NZ$1.0749, down 0.6 percent on the day. It touched a peak of NZ$1.0874 earlier in the week. The New Zealand dollar rose to $0.6660, benefiting from improving oil prices. A soft reading on producer prices pared some of the kiwi's gains as it added to pressure on the central bank to cut interest rates further.
New Zealand government bonds eased sending yields 4 basis points higher at the long end. Australian government bond futures dipped, with the three-year bond contract off 1 tick at 98.170. The 10-year contract dropped 4.5 ticks to 97.4650 in a bearish steepening of the curve. The 20-year contract fell 7.5 ticks to 96.9200.
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