Australian dollar near 3-month high as jobless rate dips from 6-month high

Aussie is now just 33 pips away from a 10-month high and 54 pips near 21-month high.

Australian dollar
Australian dollar Reuters

The Australian dollar held near a three-month high on Thursday (Feb 16) as data showed unemployment rate came in less than expected for January while weakness in the US dollar on profit booking also aided the Aussie.

AUD/USD jumped to 0.7734, its strongest since November 9, and up from the previous close of 0.7718. The pair had rallied 0.8% on Wednesday and 1.8% so far this month.

The Aussie is only a shade away from the resistance barrier at 0.7760, a break of which will take it to a 10-month high. Another 20 pips and the pair will be trading at a 21-month high.

Seasonally adjusted unemployment rate fell to 5.7% in January in Australia from 5.8% in December while markets had been expecting no change in the rate. The December rate was a 6-month high.

The seasonally adjusted labour force participation rate slipped to 64.6% from 64.7%, slightly less than estimates of 64.7%

Employment increased by 13,500 to 11,998,200 and higher than markets consensus of 10,000, mainly helped by the rise of 58,300 to 3,872,500. Full-time employment decreased 44,800 to 8,125,700.

Unemployment decreased 19,300 to 720,200. The number of unemployed persons looking for full-time work decreased 16,000 to 511,000 and the number of unemployed persons only looking for part-time work decreased by 3,300 to 209,200, the Australian Bureau of Statistics said on Thursday.

The US dollar that had rallied to a 1-month high on upbeat US data and Fed Chair Yellen's rate hike talks eased on Thursday on profit booking.

The USD index touched 101.76 on Wednesday, its highest since January 12, also helped by better-than-expected U.S. inflation and retail sales data before retreating to 100.76 on profit-taking.

Data showed on Wednesday that U.S. consumer prices recorded their biggest gain in nearly four years, jumping 0.6% in January. Retail sales also outpaced expectations, increasing 0.4% last month compared to market consensus of 0.1%.

Yellen in her testimony to lawmakers on Tuesday hinted more rate hikes were on the way as the jobs market has improved and inflation has shown signs of nearing the Fed's two percent goal.

US data scheduled for Thursday are January building permits and housing starts numbers and the weekly jobless claims in addition to the Philadelphia Fed's manufacturing index for February.

Initial jobless claims for the week to February 11 is seen rising to 245,000 from 234,000 in the previous week. Analysts expect the Philadelphia index to drop to 18 from 23.6.