Dollar firmly higher in late trade

The local unit has edged up despite new speculation over interest rates.

The Australian dollar got a small lift on Thursday, from news the economy created some jobs in June.

At 6.10pm (AEST), the Australian dollar was trading at US76.34 cents, compared with US76.07 late on Wednesday.

Still, gains were limited as unemployment also nudged higher over the month, prompting debate about whether the data added to the case for an interest rate cut in August.

Most economists said the debate about the Reserve Bank of Australia’s intentions would be largely unaffected by the jobs reports. Far more critical is next week’s second-quarter inflation data.

Interest rates were last cut in May, when the RBA responded to a report showing ultra-benign inflation in the first quarter.

With the RBA’s official cash rate now at a record low of 1.75 per cent, there remains scope for rates to be cut further, economists said.

Concerns over the UK’s move to depart the European Union and fears about Australia’s recent cliffhanger election have dented business confidence, which might also form part of a decision to cut interest rates next month.

Large bets are being wagered on a local rate cut in August, with the RBA saying earlier this month it is assessing data to determine if interest rates need to change.

George Tharenou, economist at UBS, said the jobs data was largely neutral, with a small rise in job creation mixing with a small rise in unemployment.

“This all continues to put the onus on low inflation to see the RBA deliver our expected 25 basis point rate cut in August,” he said.

- Dow Jones newswires