SYDNEY/WELLINGTON: The Australian dollar extended already hefty gains on Thursday as strong jobs data led the market to scale back expectations for rate cuts in the near-term, while the kiwi stayed buoyed in the wake of a broad risk rally offshore.
The Aussie was up half a cent at $1.0206, having climbed as far as a 3-week high of $1.0235. That came on top of a 1.7 percent rise overnight, giving it a spectacular 8.5 percent increase from a 13-month low of $0.9388 touched just last Tuesday.
Thursday's data showed the economy created 20,400 jobs in September, more than twice forecasts. Unemployment dipped to 5.2 percent, from a 10-month high of 5.3 percent, while full-time employment also firmed by 10,800.
"This latest economic news, coupled with improving sentiment around the European debt issues and a willingness by authorities there to stabilise the situation, should see the AUD supported on any dips," said Paul Kammel, head of client management at Travelex Global Business Payments.
He says $1.05 is in sight over the next few weeks.
Australian debt futures dived, paring chances of deep rate cuts. The November contract implies a yield of 4.57 percent and a three-in-four chance of a 25 basis-point rate cut. It was fully pricing an easing before the data and a cut of 50 bps not long ago.
Australian debt eased, with the three-year futures contract off 0.17 point to 96.140 and the 10-year 0.145 points down to 95.515.
The Aussie extended gains on the yen and euro. Against the kiwi, it surged to a four-month peak of NZ$1.2827.
Major resistance is seen at $1.0235/40, the 61.8 percent retracement of the $1.0765 to $0.9388 move, and 50 percent of the $1.1081 to $0.9388 drop. A break above that would target $1.0290, the 55-day MA. Support is found around $1.0106.
Some traders warned the Aussie had come too far too quickly in the past 24 hours and were looking to sell into those key resistance levels.
Euan McCreadie, senior dealer at OzForex, said the Aussie will struggle to get through $1.0300 over the next 24 hours as all the good news out of Europe have been priced in.
"It's very much a relief rally and something will pull it down again."
Risk assets rallied on Wednesday after Slovakia reached a deal to strengthen the euro zone rescue fund.
The Australian dollar took a slight knock after China's trade surplus narrowed for a second straight month, reflecting global economic weakness and domestic cooling.
Still, it was not all bad news for Australia, with China reporting its largest trade deficit with Australia of $5.2 billion for September. China is Australia's top trading partner.
NEW ZEALAND DOLLAR
The New Zealand dollar stayed well bid at $0.7952, from $0.7959 in New York, having powered up 2 percent overnight to a three-week high of $0.7996.
The kiwi is seen holding around the 200-day moving average of $0.7960, with an assault above $0.8000 possible.
A soft New Zealand manufacturing survey and a drop in food prices were seen further easing pressure on the central bank to raise interest rates.
Markets now imply a total tightening of 32 bps over the next 12 months. The Reserve Bank of New Zealand has held its cash rate at 2.5 percent for the past four reviews because of the uncertain global outlook.
NZ government debt fell, sending local yields up to 8.5 bps higher.
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