SYDNEY/WELLINGTON: The Australian dollar climbed to a 4-1/2-month peak on Thursday as startlingly strong jobs data added to the case for a steady interest rate outlook, while the New Zealand dollar climbed to a 2-1/2-year high following another upbeat economic report.
The Aussie leapt more than half a cent to $0.9440, its highest since late November, before easing back to $0.9410. It was still sharply higher for the week to show a gain of 1.3 percent.
It also rose against the yen, euro and pound, and even on its feisty kiwi neighbour.
It touched a near five-month peak of 71.7 against a basket of currencies.
Data showed Australian employment climbed 18,100 in March, more than triple forecasts, while the jobless rate took a surprise dive to 5.8 percent.
The upbeat result led the futures market to price out any chance of another easing and increase the chances of a hike by year-end. Pricing implied a probability of 30 percent of a tightening by December, from 8 percent before the data. Swap market pricing implies 21 basis points of rate hikes on a 12-month horizon.
"The data will be welcomed by the RBA as further validation of their shift to a steady hand in February," said Sean Callow, a senior currency strategist at Westpac. "It provides some domestic fuel for an AUD/USD rally that has been largely driven by USD weakness over the last week."
A break of the late November peak around $0.9448 would open the way to $0.9500.
Australian government bond futures fell, with the three-year bond contract down 4 ticks to 96.930. The 10-year contract shed 5 ticks to 95.920.
The Aussie, which has gained 8 cents since a trough in January, barely blipped after China posted another set of disappointing data.
The Antipodeans are usually sensitive to news out of China, because it their top export market.
Yet they has proved particularly resilient to negative news as investors seem convinced Beijing will soon announce stimulus measures to boost the slowing economy.
Also underpinning the Aussie is a surge of 21 percent in China's iron ore imports in March. Iron ore is Australia's largest export earner.
Across the Tasman sea, the New Zealand dollar soared to a 2-1/2-year high of $0.8746 on expectations that the kiwi's rate advantage against the greenback will grow as New Zealand interest rates rise while the Fed takes it time in hiking after it ends its asset-buying programme.
The kiwi gained broadly, jumping to a session high around 89.20 yen , roughly 1 percent higher from a low hit in offshore trade.
This pushed the kiwi higher against a currency basket, with its trade-weighted index matching a post-float high of 81.03 according to Reuters data.
"New Zealand is where the rate hikes are coming. People are expecting higher rates here, and the economy is outperforming," said Tim Kelleher, head of institutional FX sales at ASB in Auckland.
He added that a strong manufacturing PMI reading on Thursday added to ongoing evidence of the economy's health, pushing the kiwi higher. Markets see a 96 percent chance that the Reserve Bank of New Zealand will raise official rates by 25 basis points to 3.0 percent, after it kicked off its monetary tightening cycle last month, the first among developed-country central banks in this cycle.
Kelleher said he saw a smattering of offers from domestic importers through $0.8750, while adding that offshore participants were driving the currency higher.
"You'd like to think the kiwi's hit a top, but it keeps grinding higher," he said, while adding: "If the trade-weighted index gets above 81, we could see some selling."
Whether the kiwi holds above $0.8700 level will key for its near-term outlook. Sustained gains above the psychologically crucial level will keep the door open to a test of $0.8842, the kiwi's highest level since it was floated in 1985.
But that level has been a sore point for the kiwi, after an unsuccessful attempt to vault above $0.8700 last week, while a previous try a year ago also ended in failure.
New Zealand government bonds were little changed.
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