The Australian dollar has soared after a surprise fall in the unemployment rate to 5.8 per cent.
At 1700 AEDT on Thursday, the local unit was trading at 75.97 US cents, up from 74.65 cents on Wednesday.
The Aussie leapt above 76 US in response to the data, but Nomura rate strategist Andrew Ticehurst says investors overreacted.
“The decline in the unemployment rate was not driven by stronger employment growth but by fewer people being recorded as unemployed,” he said.
The total number of people with jobs rose by just 300 in the month, much weaker than expectations of a rise of 12,500.
“Finally, the likely lower path of the Fed Funds rate, sketched out by the Federal Open Market Committee today, has seen the Australian Dollar shift higher,” he said.
“This will likely not be greeted with joy at the Reserve Bank of Australia.”
Mr Ticehurst said the US Federal Reserve’s dovish tone after leaving rates unchanged indicated it expected tepid growth in the world’s largest economy.
CommSec chief economist Craig James said any further strength in the currency may result in policy makers starting the process of jawboning, or talking down the Aussie dollar.
CURRENCY SNAPSHOT AT 1700 AEDT ON THURSDAY
One Australian dollar buys:
* 75.97 US cents, from 74.65 cents on Wednesday
* 85.23 Japanese yen, from 84.65 yen
* 67.72 euro cents, from 67.27 euro cents
* 112.18 New Zealand cents, from 112.93 NZ cents
* 53.35 British pence, from 52.85 pence
(*Currency closes taken at 1700 AEDT previous local session)
Source: IRESS
