Business Recorder
SYDNEY: The Australian dollar slipped on Thursday after a surprisingly soft set of jobs data lengthened the odds on a near-term hike in interest rates, though hopes for some sort of deal in the Gulf provided some support to risk assets. The Aussie lost 0.5% to $0.7118, after rallying almost 0.7% the previous session and away from a low of $0.7070. Resistance lies around $0.7080 and $0.7277. Australia reported a drop of 18,600 in employment for April, badly missing market forecasts of a 15,000 gain. The jobless rate also climbed to its highest since late 2021 at 4.5%, when analysts had looked for a steady 4.3%. Markets quickly moved to price in just a 10% chance of a quarter point rate hike from the Reserve Bank of Australia (RBA) in June, down from 20% before the data. Pricing for August was pared to 40%, from 60%. “This is likely to imply a more cautious pace of RBA tightening ahead,” said Wee Khoon Chong, an APAC macro strategist at BNY. The RBA has already lifted rates by 75 basis points since February, aiming to head off stubborn inflationary pressures at home and offset the impact of the recent spike in oil prices. “In our view, today’s jobs data is not sufficient to counter the upside inflationary impact from oil,” added Wee Khoon Chong. “Central banks are likely to remain vigilant in anchoring inflation expectations, and we continue to see upside risk to the RBA rate outlook.” The kiwi dollar eased 0.2% to $0.5860, having bounced 0.6% overnight after coming within a whisker of chart support at $0.5816. A rise above $0.5912 was now needed to put it on a firmer technical footing. In New Zealand, figures showed a surprisingly large trade surplus of NZ$1.9 billion ($1.11 billion) in April as exports jumped to a record high on beef, gold and dairy. The country even saw a rise in oil exports, though that did little to offset the damage being done to consumer demand from higher petrol prices or the impact on inflation. The Reserve Bank of New Zealand meets next week and is considered likely to hold rates at 2.25%, while discussing when to hike given the inflationary pulse from energy costs. Markets imply around an 80% chance of an increase in July so are vulnerable to any dovish tilt from the RBNZ.
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