SYDNEY: The Australian and New Zealand dollars huddled near multi-week lows on Thursday as markets pared back bets on US rate cuts, while soft local jobs data added to the case against further tightening at home.
The Aussie was holding at $0.6560, having hit a two-month trough of $0.6525 overnight.
A break of support at the 200-day moving average of $0.6583 added to the bearish technical outlook, with $0.6453 the next target.
The kiwi dollar eased to $0.6118, after reaching a five-week low of $0.6088 in the previous session. It did find some support at its 200-day moving average of $0.6090, with $0.6055 the next bear target.
Australian jobs data showed a sharp 65,100 drop in December, reversing most of an unexpected surge from the month before and badly missing forecasts of a 17,600 increase.
The pullback reflected changes in hiring habits that are messing with the seasonal adjustment process and making October and November look strong at the expense of December.
While employment still grew over the entire fourth quarter, it did not rise fast enough to match the expansion of the labour force so the unemployment rate ended up climbing to 3.9% in December from 3.6% in September.
“Trend employment growth is growing by around 19k a month, which is a softer than the 31k a month needed to keep the unemployment rate from rising,” said Tapas Strickland, head of markets economics at NAB.
“If sustained, that would see the unemployment rate lifting a tenth every three months in 2024.”
This loosening in what had been a very tight labour market should assuage the Reserve Bank of Australia’s (RBA) concerns about wage growth and make it unlikely it will hike rates again at its February policy meeting.
Australia, NZ dollars hit one-month lows as support breaks
NAB this week dropped its call for a hike next month and joined the other three major local banks in predicting the tightening cycle was over.
But neither are rate cuts seen likely anytime soon, with futures not fully priced for a move in until November.
A quarter-point easing in June is seen as a 40% chance, with August at 60%.
That was bad news for bonds, sending three-year futures down another 8 ticks to 96.160 and bringing losses for the week so far to 19 basis points. Yields on 10-year bonds are up 21 basis points for the week at 4.290%.
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