Sydney: The Australian dollar jumped on Thursday after data showed the country’s unemployment rate unexpectedly ticked lower and reduced market expectations of a February interest rate cut.
The Australian dollar rose 0.5 per cent to US$0.6879 after five straight sessions of losses, report agencies.Official figures on Thursday showed the unemployment rate slipped to a nine-month low of 5.1 per cent in December as more jobs were added while the participation rate held steady at 66 per cent.
Financial futures were quick to pare back bets of an interest rate cut by the Reserve Bank of Australia (RBA) in February to 20 per cent from 50 per cent before the data.
“The fall in the unemployment rate... underlines that monetary and fiscal stimulus are starting to work and reduces the pressure on the RBA to cut interest rates next month,” said Marcel Thieliant, senior economist at Capital Economics.
The RBA cut interest rates three times last year to a record low 0.75 per cent and has said it will do more if needed.
However, despite the improvement in the latest report the unemployment rate was still well above the 4.5 per cent level the RBA says is needed to lift wages growth and inflation.
“The RBA may still decide to cut interest rates in February because the current rate of wage growth isn’t enough to meet its inflation target,” Mr Thieliant added.