Australia's unemployment rate fell to 5 per cent in September, lower than the 5.3 per cent rate anticipated and down to a level not expected by the RBA until the end of next year. The Australian dollar was broadly stronger on the news as the RBA has pegged higher rates to a gradual reduction in the unemployment rate and increased inflation.
"The Aussie labour market data at face value was very strong," said Philip Borkin, senior macro strategist at ANZ Bank New Zealand. "It corroborates the RBA's relative optimistic tone, and the Aussie outperformed, particularly against the kiwi."
Borkin said the local currency was weaker against the greenback after minutes to the Federal Reserve's last policy meeting reiterated chair Jerome Powell's hawkish message.
The greenback has been supported by rising yields on government bonds, with the yield on US 10-year Treasuries 49 basis points higher than their New Zealand counterpart. Borkin said longer-dated New Zealand rates traditionally track their US counterparts but have decoupled with the Reserve Bank keeping alive the chance for a rate cut.
New Zealand's two-year swap rate increased 1 basis point to 2.02 per cent; 10-year swaps were up 2 basis points at 2.92 per cent.
The kiwi declined to 73.71 yen from 73.95 yen yesterday and decreased to 4.5428 Chinese yuan from 4.5573 yuan. It traded at 50.02 British pence from 49.97 pence yesterday and was little changed at 56.97 euro cents from 56.93 cents. The trade-weighted index decreased to 71.67 from 71.89 yesterday.
