The Australian dollar fell to a two-and-a-half month low on Thursday after mixed jobs data sparked some speculative selling though the numbers were unlikely to build the case for an imminent rate cut by the Reserve Bank of Australia (RBA). The Aussie dropped as low as $0.7209, a level not seen since early March, from $0.7232 early and was last traded at $0.7214. A sustained break under $0.7212 would target a major retracement level of $0.7063.
The New Zealand dollar was also licking its wounds from the Fed downdraft at $0.6742, having fallen 1 percent overnight. Key support was found at 67 cents, the 50 percent retracement of the January-May move. It received some modest support after an ANZ survey showed that local job ads added 4.6 percent from a year ago, suggesting strength in the labour market.
Still, interbank futures are pricing around a one-in-10 chance of a cut by mid-year and are fully priced for a move by the end of the year. The Aussie had already skidded 1.3 percent on Wednesday on rising expectations that the US Federal Reserve (Fed) may hike as early as June. New Zealand government bonds eased, sending yields 6.5 basis points higher at the long end of the curve.
Australian government bond futures extended losses, with the three-year bond contract off 3 ticks at 98.380. The 10-year contract shed 6 ticks to 97.6550, while the 20-year contract dropped 6.5 ticks to 97.0200. A total of 10,800 net new jobs were created in April, slightly undershooting forecasts of 12,500, with the unemployment rate staying at its lowest in more than two years.