SYDNEY: The Australian and New Zealand dollars eased from multi-week highs on Thursday as a rise in Treasury yields lifted their US counterpart, while upbeat Australian jobs data failed to move the dial on interest rate expectations at home.
The Aussie slipped 0.3% to $0.6488, having touched a three-month top of $0.6542 the previous session.
That still left it 2.1% higher for the week so far and closer to the 200-day moving average at $0.6597.
The kiwi dollar lapsed to $0.5997, after stretching as far as $0.6054 overnight and within a tick of its October high of $0.6055.
The Aussie was underpinned by strong demand against the yen which saw it spike to a nine-year peak of 98.60 yen, having climbed 2% in three sessions.
There was little reaction to data showing Australian employment blew past forecasts with a rise of 55,000 in October, though that was balanced by a rise in unemployment to 3.7%.
With record migration helping meet the demand for labour, markets doubt the Reserve Bank of Australia (RBA) will hike again in the near term, following last week’s rise to 4.35%.
“Today’s figures don’t provide enough of a “smoking gun” for a follow-up rate hike in December,” said Diana Mousina, deputy chief economist at AMP Capital.
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“Another hike is still a possibility for February after the next round of quarterly inflation data, but we think the macroeconomic environment will be weaker and allow the central bank to keep interest rates on hold.”
Futures imply only a 7% chance of another rise in December, and are evenly split on whether the tightening cycle is over for good.
The market is also pricing in almost no chance of an easing in policy next year, a market contrast to the 90 basis points of rate cuts implied for the United States and the European Union.
Futures imply almost no chance of another hike from the Reserve Bank of New Zealand when it meets Nov. 29, following a run of softer data on inflation, jobs and consumer spending.
Indeed, markets are fully priced for a first rate cut as early as August next year, with around 48 basis points of easing priced in for 2024.
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