The Australian dollar plumbed one-month lows on Wednesday on worries about the nation's damaging floods, but regained some ground after upbeat data caught the market short, a risk that looms large ahead of the employment data. Employment has sped past all expectations last year, rising at a breakneck pace of 402,500 in a potential labour force of just 12 million.
"Investors are likely aware of this, and this could lead to a bit of an AUD short squeeze into tomorrow's data release," said Barclays Capital analysts. The Aussie was last at $0.9846, having earlier fallen to $0.9803 after a Reserve Bank of Australia (RBA) board member, Warwick McKibbin, said the floods could cost up to 1 percentage point of GDP, the most bearish estimate yet.
The Aussie also underperformed the New Zealand dollar, falling to six-week lows at NZ$1.2909, before drifting back up to NZ$1.2967. The kiwi was a touch lower against the greenback, having escaped much of the drama engulfing the Aussie. It last traded at $0.7594, after drifting between $0.7582 and $0.7607, well within Tuesday's trading range.