Dollar falls after jobs data

THE dollar is higher despite suffering a large fall on the back of weak local employment figures.

In overnight trade the Australian currency peaked at 90.26 US cents, its highest level since, July 30.

THE Australian dollar has remained higher despite suffering a large fall on the back of weak local employment figures.

At 12pm AEST today, the local unit was trading at 89.95 US cents, up from 89.64 cents yesterday.

The currency fell as low as 89.77 US cents following the release of the employment data at 11.30am AEST, after peaking at 90.35 cents earlier in the day.

The unemployment rate stayed at 5.7 per cent in July, but the total number of people with jobs fell 10,200 in the month, the Australian Bureau of Statistics figures show.

The participation rate fell to 65.1 per cent, the lowest level in seven months.

CMC Markets foreign exchange dealer Tim Waterer said the jobs numbers were a negative for the Australian dollar.

"It lost half a US cent in value but it has since recovered some ground," he said.

"It's a case of traders assessing what impact today's data will have on the Reserve Bank of Australia's interest rate outlook."

Mr Waterer said the disappointing loss of jobs was offset by the stable unemployment rate.

"However, I'm not sure traders are reading too much into that given the fall in the participation rate," he said.

"There are still some troubling signs in relation to the labour market and that's put a little bit of pressure on the Australian dollar."

The local currency rallied during the offshore session last night as the US dollar lost ground against all the major currencies amid concerns about the Japanese economy.

Mr Waterer said markets were now awaiting the release of Chinese international trade figures for July, due out this afternoon.

Meanwhile, the Australian bond market was firmer at noon.

At 12pm AEST today, the September 10-year bond futures contract was trading at 96.325 (implying a yield of 3.675 per cent), up from 96.305 (3.695 per cent) yesterday.

The September three-year bond futures contract was at 97.490 (2.510 per cent), up from 97.480 (2.520 per cent).

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