SYDNEY: The Australian dollar edged higher on Thursday after strong jobs data raised the likelihood that the central bank will wind down its pandemic-era bond buying early next year, following in the foot steps of the US Federal Reserve.

The Aussie rose slightly to $0.7180 before steading by midday, with the employment data and a speech by Reserve Bank of Australia (RBA) Governor Philip Lower coming hours after the Fed said its bond buying program may end by March, followed by three possible rate hikes in 2022.

The New Zealand dollar dipped 0.3% to $0.67735. The New Zealand economy shrank 3.7% in the third quarter, the second-largest decline on record though not as bad as economists had expected in a Reuters poll.

Australian employment blew past forecasts, adding 366,100 jobs in November, helping to push down the jobless rate to 4.6% from 5.2%. The RBA had forecast unemployment would not reach 4.5% until the middle of next year.

The yield on the Australian 3-year bond climbed to its highest in around a week, with market bets increasing that the RBA will begin to wind-down.