WELLINGTON: The Australian dollar edged up on Thursday, boosted by broad selling in the US dollar and as investors ultimately shrugged off a weak reading of Australia's labour market after major revisions to the series cast doubt on the data's reliability.
The Aussie rose 0.2 percent to $0.8857, bouncing back from an initial slide to $0.8791 after official figures showed the Australian economy lost a net 29,700 jobs in September, wrongfooting expectations for a 20,000 increase while the jobless rate ticked up to 6.1 percent.
While the data showed that the labour market is struggling to improve, investors quickly bought back the currency as many questioned the robustness of the figures after the country's statistics body radically revised past readings due to an absence of seasonal patterns this year.
"The market has lost credibility in the data for now.
The Aussie briefly went down, before coming back as common sense prevailed," said a trader at a European bank in Singapore.
"The market is just not sure which way to go. Forget the number," he said adding that he expected the Aussie to consolidate around $0.8840.
The New Zealand dollar tracked the Aussie higher, pushing up 0.3 percent to an intraday high of $0.7938.
The Aussie extended gains into a fourth session, pulling further away from a four-year low of $0.8642 hit late last week as many investors book profits on the US dollar's month-long rally versus most major currencies.
It was supported after investors sold the greenback after minutes released on Wednesday from the Federal Reserve's latest policy review prompted some investors to pare back expectations that US interest rates may rise by mid-2015.
Still, many investors expect that the Aussie will struggle to rise further towards $0.9000 in the near term given that economists believe the Reserve Bank of Australia may hold off from raising interest rates until 2016 as the economy has been slow to recover from a slowdown in the mining sector.
KIWI REPRIEVE CONTINUES
Broad selling in the US dollar on Thursday extended the kiwi's reprieve from a dramatic two-month sell-off which has left the currency lingering in range of a 14-month low of $0.7708 hit last week.
The kiwi has lost nearly 11 percent since July as investors have dumped the currency on falling global dairy prices, a pause in the Reserve Bank of New Zealand's monetary tightening cycle and kiwi-selling intervention by the central bank.
While many in the market expect the kiwi's downward trend to continue, ANZ analysts said that the US dollar's stumble in reaction to Wednesday's FOMC minutes suggested that the kiwi's downward momentum may slow in the coming months.
"This further supports the view that we are currently consolidating last month's NZD sell-off with the potential for a counter-trend rally which could surprise with its size," ANZ analysts said in a note.
"We see some potential for NZD to pop back above 80 (US)cents in the short term."
Still, many analysts expect that any gains above $0.8000 will be short lived, and that the kiwi will weaken further as expectations for US rate rises heat up in the coming months.
Some in the market see the possibility of a fall towards $0.7500 before the year is out.
Australian government bonds edged up, tracking gains in US Treasuries and pushing three-year bond futures 5 ticks higher to 97.380.
The 10-year contract rose the same amount to 96.655. New Zealand government bonds also rose, nudging yields 3 basis points lower across the curve.
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