SYDNEY: The Australian dollar hopped higher on Thursday as upbeat jobs data calmed concerns about a downturn in the labour market and lessened the need for another rate cut in the very near term.
The market probability of a September easing from the Reserve Bank of Australia (RBA) pulled back to 30%, from 40% before the data, though a reduction in November remains almost fully priced.
That helped lift the Aussie 0.3% to a two-week top of $0.6568, adding to a similar gain overnight. Major resistance is up at $0.6625, with support around $0.6483.
The New Zealand dollar followed with a rise of 0.2% to $0.5986, after stretching as far as $0.5996 overnight. The next bull target is $0.6059, with support at $0.5913.
Thursday’s data showed jobs bounced by 24,500 in July, after almost no growth in June, while the unemployment rate edged back to 4.2% from a 3-1/2-year high of 4.3% in June.
The detail was firm with full-time jobs surging 60,000 as more women got work or were offered longer hours.
“The labour force survey will probably add to the case for the RBA to leave rates on hold at its next meeting in September,” said Abhijit Surya, a senior APAC economist at Capital Economics.
“However, if we’re right that the labour market will loosen again over the coming months, while activity and inflation remain subdued, the Bank should have few concerns about resuming its easing cycle in November.”
After the central bank cut rates a quarter point to 3.60% this week, RBA Governor Michele Bullock indicated another two or three cuts were likely should inflation continue to moderate as expected.
Futures now also imply a 100% chance the U.S. Federal Reserve will ease at its meeting on September 17, a move that could make it easier for the RBA to cut at back-to-back meetings should it want to.
The Reserve Bank of New Zealand holds its next policy meeting on August 20 and is considered certain to trim the 3.25% cash rate by 25 basis points, bringing its entire easing cycle to a thumping 250 basis points.
Two-year swap rates have already hit their lowest since early 2022 at 2.9675%, allowing three of the major local banks to cut their mortgage rates this week.
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