“Australian and New Zealand jobs growth surged, sending the currencies soaring and undermining central bank efforts to relieve pressure on manufacturers and exporters.
The number of people employed in Australia rose by 50,100 in April from a month earlier, more than four times economists’ estimates, and the jobless rate unexpectedly fell to 5.5 percent, government data showed today. New Zealand employers added a record 38,000 jobs last quarter and its unemployment plunged to a three-year low of 6.2 percent. Economists expected 6.8 percent.
Both currencies surged to levels that preceded the Reserve Bank of Australia’s decision two days ago to cut the benchmarkinterest rate to a record low and New Zealand Governor Graeme Wheeler’s announcement a day later that he has intervened to weaken the kiwi. South Korea also cut rates today to ease pressure on exporters. The surge in Australian jobs may undermine the case for RBA Governor Glenn Stevens to add to 2 percentage points of reductions in the past 19 months.
“Reserve Bank Board members probably winced when they heard the job numbers,” said Craig James, a senior economist at a unit of Commonwealth Bank of Australia, the nation’s biggest lender. “The Reserve Bank will probably leave a rate cut on the table over the next few months. But more figures like this and it clearly won’t be acting on the easing bias.”
Currency Reaction
The Australian dollar jumped as high as $1.0254 from $1.0165 before the jobs data. The three-year bond yield rose six basis points, or 0.06 percentage point, to 2.57 percent. The move in yields was the biggest since March 25.
The kiwi bought 84.61 U.S. cents at 6.24 p.m. in Wellington from 84.09 cents before the report. The currency had declined to a five-week low yesterday…”
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