Aussie Strengthens on Job Data as Slowdown in Growth Hurts Kiwi

  • Australian job data strong across board: NatWest’s Mohi-uddin
  • Kiwi weakens as much as 0.4% as GDP growth less than forecast

Australia's Unemployment Rate Falls to 5.5% in May

Australia’s dollar advanced against all its major peers after the nation added more jobs than analysts forecast. New Zealand’s currency fell as economic growth slowed.

The Aussie rose for a second day as employment jumped 42,000 in May, exceeding the prediction of 10,000 in a Bloomberg survey. The currency gapped higher in response to the data although residual macro offers from ex-Asia funds are still to be completed, according to an Asia-based trader who isn’t authorized to speak publicly. The U.S. dollar was little changed after falling Wednesday when the Federal Reserve raised interest rates.

“The Australian employment report was strong across the board,” said Mansoor Mohi-uddin, a Singapore-based strategist at NatWest Markets, a unit of Royal Bank of Scotland Group Plc. “It will allay the RBA’s fears that solid forward-looking indicators like business conditions were not translating into a firmer labor market.” 

New Zealand dollar’s fell from near a four-month high after a report showed gross domestic product grew 0.5 percent in the first quarter, less than the forecast of 0.7 percent in a Bloomberg survey. The economy expanded 2.5 percent from a year earlier, below the 2.7 percent estimate.

  • AUD/USD jumps 0.4% to 0.7616 after reaching 0.7636 on Wednesday, highest since April 3
    • Resistance at 0.7646, April 3 high; 0.7663, March 31 high
    • “Positive headline result should be AUD supportive, particularly versus the NZD, given the softer Q1 NZ GDP released this morning, and the cross-rate’s sensitivity to labor market trends,” says Peter Dragicevich, FX strategist at Nomura Singapore
  • Australia’s 3-year bond yield erases earlier declines after data was released to be 0.5bp higher at 1.72%
  • NZD/USD falls 0.4% to 0.7233 after dropping as low as 0.7231
    • Kiwi’s decline filled offshore bids after dealers marked spot lower in reaction to 1Q GDP data, according to an Asia-based FX trader
    • Leveraged accounts were first in to sell the data print
  • USD/JPY little changed at 109.55
  • “The market seems to take today as a break, keeping pair mostly in 109 levels,” says Kumiko Ishikawa, FX market analyst at Sony Financial Holdings in Tokyo

— With assistance by Michael G Wilson

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