SYDNEY: The Australian dollar recouped early losses on Thursday as an upbeat jobs report helped offset broad gains in its U.S. counterpart, while news on the New Zealand economy proved slightly less dire than feared.
The Aussie was back at US$0.6765, off a low of US$0.6738. It had briefly been as high as US$0.6820 overnight after the Federal Reserve cut U.S. rates by 50 basis points. Support lies around US$0.6690 and US$0.6621.
The kiwi dollar was a fraction lower at US$0.6203, having also failed to sustain a pop to US$0.6267 overnight. It has support at US$0.6180 and US$0.6107.
Australian employment figures showed jobs jumped 47,500 in August, handily beating forecasts of a 25,000 gain for a third straight month. Unemployment held at 4.3 per cent as expected as the workforce continued to grow rapidly.
The continued strength in hiring points to a still tight labour market and supports the Reserve Bank of Australia's (RBA) case against the need for a near-term rate cut.
"Forward indicators of demand have cooled, but still suggest the market will remain relatively tight," said Sean Langcake, head of macroeconomic forecasting for Oxford Economics Australia.
"This is good news for jobseekers and for the broader health of the economy," he added. "However, it does confirm our view that the RBA will not be able to ease rates until at least Q2 2025."
Investors remain more dovish, in part because most other developed world central banks have embarked on what are likely to be lengthy easing cycles.
Markets imply around a 30 per cent chance of a quarter-point cut in November, and a 76 per cent probability of a move in December.
In New Zealand, figures showed the economy contracted by 0.2 per cent in the second quarter, a bit better than the 0.4 per cent fall expected but mainly because of a steep drop in imports.
The data merely confirmed the weakness of the economy and left the market pricing in a 100 per cent chance of a quarter-point rate cut from the Reserve Bank of New Zealand in October.
Swaps also imply a 25 per cent chance the 5.25 per cent cash rate will be cut by 50 basis points.
"A rate cut in October is as close to a done deal as you get," said Jarrod Kerr, chief economist at Kiwibank. "We'd advocate 50 bp, and again, 50 in November."
"We argue the RBNZ needs to get the cash rate below 4 per cent, asap, as it takes up to 18 months for rate cuts to filter through the economy." (Reporting by Wayne Cole; Editing by Kim Coghill)