- Two-year yield rises above cash rate first time since July
- Employers added most jobs last month since March 2012
The Australian dollar jumped the most in five weeks after a government report showed the unemployment rate unexpectedly fell in October. Government bonds slumped.
The Aussie advanced versus all of its 31 major counterparts as the Bureau of Statistics said employers added the most jobs since March 2012. Swaps traders pared bets the Reserve Bank of Australia will reduce interest rates from an record-low 2 percent.
“It should give some confidence to the RBA to perhaps delay potential easing,” said Roy Teo, a strategist at ABN Amro Group NV in Singapore. “This recovery in the Aussie could extend to 71.70 cents in the short term with some support when Europe comes in and reacts to the data.”
Australia’s currency strengthened 1 percent to 71.34 U.S. cents as of 6:35 a.m. New York time, heading for the biggest daily gain since Oct. 9. It reached 71.54 cents, the highest level since Nov. 6.
Traders reduced the odds the RBA will cut rates by its June meeting to about a 50 percent probability, from 62 percent odds earlier Thursday, according to swaps prices compiled by Bloomberg.
Australia’s benchmark 10-year bond yield jumped eight basis points, or 0.08 percentage point, to 2.95 percent after reaching 2.99 percent, the highest level since July 15. The price of the 3.25 percent security due in April 2025 fell 0.68 to 102.43.
The two-year yield climbed above the cash rate for the first time in four months, reaching 2.07 percent. The extra yield over similar-maturity Treasuries widened 10 basis points to 1.17 percentage points, the biggest increase since Sept. 17.
Australian employers added 58,600 jobs in October, sending the unemployment rate down to 5.9 percent, from 6.2 percent in September. Economists had predicted the rate to be unchanged.