Australian Dollar Rises after April Jobs Data, NZ Gains

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SYDNEY, May 20 Reuters The Australian dollar climbed on Thursday after labour force data showed a fasterthanexpected decline in unemployment in April, while the New Zealand dollar gained as well.

The Australian dollar jumped to a days high of 0.7750 from a oneweek low of 0.7710 on Wednesday after official figures showed the jobless rate had slipped to a oneyear trough of 5.5 compared to economists forecast of 5.6.

The details were positive too with fulltime jobs rising by 34,000 and the underemployment rate diving to 7.8, even though overall employment surprisingly dropped by 30,600, confounding expectations for a 15,000 gain.

Analysts were circumspect about whether the tightness in the labour market would spur faster pay hikes and consumer prices. The Reserve Bank of Australia RBA has said it will not raise interest rates until actual inflation was within its 23 target band.

What is still uncertain is the strength of the transition from lower underutilisation to higher wages growth, and then to inflation, economists at ANZ Banking Group wrote in a note.

ANZ expects the unemployment rate to fall to 4.8 by end2021 and 4.4 by end2022.

The wage data earlier in the week was slightly stronger than expected, annualising at 2.4 yy. While still below the RBAs 3 yardstick, the gap is narrowing, which has implications for the timing and speed of RBA policy changes, they added.

Interest rate futures are pointing to a 60 probability of a 15 basis point interest rate hike…

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