THE Australian dollar surged on the back of a robust labour market report yesterday.
The figures lifted the currency to its highest levels this month against the US dollar.
At the local close, the unit was trading at US87.4c, more than 2.5c above Wednesday's close.
Australian bonds fell sharply on the jobs report, particularly on the short end of the curve, as traders re-evaluated the prospects for future interest rate rises by the Reserve Bank of Australia.
The number of people employed rose to 45,900 in June, while the unemployment rate came in at a seasonally adjusted 5.1 per cent, the Australian Bureau of Statistics said. Economists, on average, had expected an unemployment rate of 5.2 per cent in June, with the number of employed up just 15,000.
After already surging earlier on the back of a banks-led stock rally in the US, the morning jobs report lifted the Australian dollar against nearly all crosses. Global economic worries had weighed on the currency and pushed it lower for much of the past two weeks, but this week it has met with steady buying pressure.
Even so, Deutsche Bank head of foreign exchange strategy John Horner said that just because the currency was rallying did not mean those economic concerns had disappeared.
"The market is trying to look on the brighter side. But we remain concerned that with the US labour market showing signs of faltering and further evidence that the US housing market is slowing, this risk rally won't prove sustainable," Mr Horner said.
Also, the dollar is near the high end of its recent range. Since mid-May, the cross has stayed mostly between US81c and US88c.
