WSJ:Australian Dollar Stronger Late After Upside Jobs Surprise
By JAMES GLYNN
SYDNEY--The Australian dollar was up against its U.S. counterpart late Thursday after local employment data for July showed a stronger-than-expected rise, pushing unemployment lower.
Economists said the report supported comments this week by Reserve Bank of Australia Governor Glenn Stevens that interest rate cuts since November are starting to support the economy.
Currency traders immediately pushed the Aussie up as expectations of further cuts in interest rates in the second half of the year were wound down.
Unemployment fell to a lower-than-expected seasonally adjusted 5.2% in July from an upwardly revised 5.3% in June, while the number of people employed rose 14,000, the Australian Bureau of Statistics said Thursday. In a poll of 18 economists ahead of the data, the average expectation was for an unemployment rate of 5.3% in July and for the economy to add 8,500 jobs.
At 0608 GMT, the Australian dollar was at US$1.0590 from US$1.0546 late Wednesday and at Y83.11 from Y82.67. It came off intraday highs around US$1.0610, however, after China's industrial production growth slowed in July, undermining hopes that growth in the world's second-largest economy has started to rebound.
The jobs data were "further evidence that the economy is tracking at close to its trend pace and will make the RBA even more comfortable with its current policy setting," said Paul Bloxham, chief economist at HSBC Australia.
Still, expectations are for the unemployment rate to nudge higher over the second half of the year, with forward looking indicators of hiring intentions weakening.
Scott Haslem, chief economist at UBS, UBSN.VX -0.75% expects the RBA won't cut interest rates any further, but admits the employment market needs to improve before that expectation is safe.
Looking ahead, the focus will be on the RBA early Friday when it announces new forecasts for inflation and economic growth.
The central bank is expected to say the economy will grow at a pace close to its long-term average of around 3%-3.5%, with inflation locked at the bottom of its 2%-3% inflation target.
Traders will be on alert for any comments about the elevated Aussie.
