The Australian and New Zealand dollars held solid gains on Thursday after the US Federal Reserve stuck to its outlook for monetary tightening this year, offsetting pressure from underwhelming local economic data. The Australian dollar stood at $0.7695, having gained 2 percent on Wednesday trading in New York. It briefly touched a three-week peak of $0.7720 where it ran into heavy resistance.
It dipped nearly a quarter of a US cent after a disappointing jobs report. Australia's employment fell 6,400 in February against a forecast rise of 16,000, while the jobless rate ticked up to 5.9 percent, from 5.7 percent.
Across the Tasman Sea, the New Zealand dollar was also holding gains at $0.7024, having risen 1.8 percent after the Fed decision.
It dipped modestly after data showed the domestic economy grew 0.4 percent in October-December, from the previous quarter, versus a 0.7 percent forecast.
New Zealand government bonds gained, sending yields 4.5 basis points lower across the curve.
Australian government bond futures rose, with the three-year bond contract up 9.5 ticks at 97.950. The 10-year contract jumped 11 ticks to 97.1450 in a bullish flattening of the curve.
"It is hard to ignore the highest unemployment rate since January last year, so it was a logical pullback for the Aussie," said Sean Callow, a senior currency strategist at Westpac.
"It reinforces the view that the Reserve Bank is on hold, but if there is any change, the risk for rates is on the downside."
The labour market is a concern for Australia's central bank as jobs growth has been heavily skewed toward part-time work.
It has kept rates at a record low of 1.5 percent since mid-last year. Interbank futures imply a mere 4 percent chance of another cut by September.
Comments
Comments are closed.