Australia’s Unemployment Rate Drops to 5.8 Percent

AustraliaMorning commuters walk across Southgate Bridge as buildings stand in the central business district in Melbourne.Photographer: Carla Gottgens

Australia’s dollar soared after government data showed employers unexpectedly added jobs last month, reducing the prospects that the Reserve Bank will ease monetary policy next year.

The Aussie climbed against all of its 16 major peers and three-year government bond yields rose to the highest this year after the statistics bureau reported employers added 71,400 positions last month, compared with the median forecast for a 10,000 decline in a Bloomberg survey of economists.

The Australia’s unemployment rate unexpectedly dropped to 5.8 percent. “This is consistent with the RBA’s view that Australia’s unemployment rate may have peaked and further reduces the risk of more RBA rate cuts, supporting a higher Australian dollar in the near term,” said Elias Haddad, a currency strategist at Commonwealth Bank of Australia in Sydney.

Australia’s dollar rose 0.8 percent to 72.84 U.S. cents as of 6:50 a.m. in Tokyo on Thursday, after surging as much as 1.5 percent. It had declined 1.5 percent in the past three trading sessions as the price of iron ore, the nation’s biggest export, tumbled and China’s trade data intensified concern over the scope of its economy’s weakness.

Policy Working

The RBA next meets on Feb. 2 after keeping the cash rate unchanged at a record low at its past seven meetings. Policy makers reduced the benchmark by 2.75 percentage points since October 2011.

“The rate kept low at 2 percent is having its effects,” said Jun Kato, a senior fund manager in Tokyo at Shinkin Asset Management. “It looks like the domestic economy is strengthening, even if China is weighing, with a shift to industries away from resource-related areas.”

Australia’s three-year government bond yields increased eight basis points to 2.18 percent, the steepest jump since Nov. 12. They touched 2.23 percent, a level last seen on Dec. 29.

New Zealand’s dollar jumped as much as 1.7 percent after the central bank cut its benchmark interest rate to a record and said it expects that level should be low enough to meet its inflation target.

Reserve Bank Governor Graeme Wheeler’s fourth rate cut of 2015 means he has fully unwound last year’s tightening. The kiwi was at 67.41 U.S. cents, paring its gain to 0.3 percent.

 

About the Author

Samed Olukoya
Samed Olukoya is the CEO/Founder of investorsking.com, a digital business media, with over 10 years' experience as a foreign exchange research analyst and trader. A graduate of University of East London, U.K. and a vivid financial markets analyst.

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