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[SYDNEY] The Australian dollar received a fillip on Thursday after better-than-expected domestic jobs figures supported expectations that interest rates are likely to stay on hold for a couple of months at least.
The New Zealand dollar also rose on speculation the US Federal Reserve is in no rush to raise rates.
The Australian dollar rallied around half a US cent to US$0.7709, pulling closer to a three-month peak of US$0.7760 touched last week. Resistance was found at a major retracement of US$0.7724.
It came off one-month lows against a broadly firm yen to stand at 77.03 yen.
The Aussie has recovered more than two cents since it hit a trough of US$0.7486 when the Reserve Bank of Australia cut rates earlier this month to an all-time low of 1.5 per cent.
Part of the latest bounce came after Australian employment added 26,200 jobs in July, versus forecasts of 11,000, while the jobless rate unexpectedly dipped to 5.7 per cent.
Yet, Thursday's report also showed a steep fall in full-time work that spoke of lingering slack in the labour market.
Futures markets showed a muted reaction, still pricing around a 50-50 chance of another cut in interest rates by the end of the year. "I see the RBA sitting on the sidelines, there is nothing to push them one way or the other. We won't get another cut until well into 2017," said Su-Lin Ong, a senior economist at RBC Capital Markets.
The New Zealand dollar was dragged higher to US$0.7290, from US$0.7242 in early trade, after the stronger-than expected Australian jobs data.
Also helping was a weaker US dollar after minutes of the Fed's latest meeting showed some policymakers were in no rush to raise interest rates.
New Zealand government bonds were mixed across the curve, down 1.5 basis points at the short end and up 2 bps at the long end.
The kiwi, like the Aussie, has proved very resilient to falling cash rates at home given they remain far above those in most of the rich world.
The swap market was pricing in 5 basis points of easing by the Reserve Bank of New Zealand in September, but almost a full rate cut for November, said BNZ currency strategist Jason Wong. "This reflects the messaging of the RBNZ, which seems to have a preference for moving at the quarterly monetary policy releases rather than the cash rate reviews," he said.
Australian government bond futures had a firmer tone, with the three-year bond contract up 1 tick at 98.630. The 10-year contract rose 3 ticks to 97.5900, while the 20-year contract added 4 ticks to 97.5900.