By TraderVox.com
Tradervox.com (Dublin) – There has been an increased expectation for a cut in interest rates in the next Reserve Bank of Australia meeting; however, these concerns have been dispelled by the recent labor market report that showed that employers in the country added more than seven times number of workers than it had be expected. The report released yesterday showed that there were 44,000 new jobs created in March against an expectation of 6,500 jobs which analysts had projected. With this data, the expectation for an interest rate cut by about 25 basis point dropped from 97.0 yesterday to 82.0 percent after the report was released.
The Australian currency has experienced a lot of pressure from major currencies due to the euro-zone sovereign debt crisis and the suppressed economic growth in China. The Aussie has lost 3.10 percent against the greenback since March 1, which is the worst performance among major currencies. In comparison, the Canadian dollar has lost 0.98 percent and the New Zealand dollar has lost 1.31 percent against the US dollar making the Australian dollar the worst performer among these three.
However, this trend has changed considerably after the labor market report. It has increased considerably against the Japanese yen and the greenback. Against the US dollar, the Aussie has tested key technical levels and it likely to change the medium term exchange rate prospects. According to Annette Beacher of TD Securities Inc in Singapore, the strong report from the labor market has reminded investors and RBA policy makers that the economy is not falling apart and the expectations of interest rate cut have been considerably diminished.
Following the report, the Australian dollar increased by 0.8 percent versus the US dollar to exchange at $1.0378 after it had touched $1.0386, which is the highest it has been since April 3. The Aussie advanced against the Japanese yen by 0.9 percent to close at 84.01 yen in Sydney. The New Zealand dollar was also up against the greenback adding 0.3 percent to trade at 82.02 US cents; it had climbed 0.4 percent yesterday. It also rose against the yen by 0.4 percent today to trade at 66.41 yen.
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