Dollar lower despite good jobs data

THE Australian dollar is lower despite getting a boost from better than expected local employment figures.

THE Australian dollar is lower despite getting a boost from better than expected local employment figures.

At 12pm AEDT today, the local unit was trading at 104.26 US cents, down from 104.63 cents yesterday.

During the offshore session last night, it fell half a US cent as worries about the US government debt overshadowed US President Barack Obama's election win.

CMC senior trader Tim Waterer said the dollar rose more than a quarter of a US cent in the minutes after the release of the jobs figures this morning. Official labour force data showed that the unemployment rate stayed steady at 5.4 per cent in October, better than the 5.5 per cent the market was expecting. There were 10,700 jobs added to the economy in October, higher than the rise of 5,000 economists had forecast.

"The employment numbers did make for quite pleasant reading against what was quite a negative backdrop with last night's falls on Wall Street," Mr Waterer said. "The fact that there were some pretty decent job creation numbers coming through were a shot in the arm for the Australian dollar."

Mr Waterer said the jobs figures justify the Reserve Bank of Australia's (RBA) decision on Tuesday to keep the cash rate at 3.25 per cent.

"I think there was some encouragement there in terms of full-time job creation of 18,700," he said. "The jobs numbers do seem to strengthen the case for a neutral stance by the RBA from here until the end of the year."
 
"That would preserve the Australian dollar's yield advantage and that would hold the currency in good stead even though there might be some financial market instability."

Meanwhile, Australian bond prices were higher at noon. At 12pm AEDT today, the December 10-year bond futures contract was trading at 96.940 (implying a yield of 3.060 per cent), up from 96.885 (3.115 per cent) yesterday. The December three-year bond futures contract was at 97.390 (2.610 per cent), up from 97.350 (2.650 per cent).