The Australian dollar shot above 90 US cents on Thursday for the first time in 14 months after a resoundingly strong local jobs report fostered talk that interest rates will rise steadily through the rest of the year. The Aussie leapt over a cent to a high of $0.9035, local swap rates hit 11-month highs, while bill and bond futures slumped after data showed Australia added 40,600 jobs in September, blowing away forecasts for a drop of 10,000.
The stunning outcome led investors to price in a 100 percent chance of a 25-basis-point rate rise in November, up from 70 percent seen on Wednesday. Some economists were talking about the chance of a 50-basis-point move in November too. "The alternative of a larger move in November cannot be ruled out, particularly if underlying inflation looks ugly when the consumer price index is released later this month," said Felicity Emmett, a economist at RBS. The Reserve Bank of Australia surprised some investors on Tuesday when it raised rates by 25 basis points to 3.25 percent, making it the first among the Group of 20 to lift rates.