The Australian dollar is more than a US cent weaker at a three-and-a-half-year low after official data showed more than 22,000 jobs were lost in December.
At 12.00 AEDT on Thursday, the Australian dollar was trading at 88.12 US cents, down from 89.22 US cents on Wednesday.
The currency dropped from 88.94 US cents to 88.08 US cents – the weakest point since July 2010 – within 20 minutes after the Australian Bureau of Statistics revealed 22,600 jobs were lost in December, even though the jobless rate held steady at 5.8 per cent.
Economists had expected the December data to show the creation of 5000 jobs but instead it showed 31,600 full-time jobs were lost while part-time employment rose by 9000.
Giving up the search
However, the unemployment rate remained unchanged because the proportion of people in work or looking for it, known as the participation rate, fell in December. The participation rate slipped from 64.8 per cent in November to 64.6 per cent last month.
ANZ head of foreign exchange Richard Yetsenga said that while financial markets weren’t expecting another interest rate cut in Australia, the labour force figures made traders see the contrast between a recovering US economy and a slowing local one.
“People have been looking for some sort of domestic recovery in Australia to match what’s going on in the US and, so far, you’ve got to look pretty hard to find it,” he said.
“These broad measures of the economy like the labour market are quite important and so far that’s not suggesting the … recovery is broadening.”
The Australian dollar came under pressure during early offshore trade on news that China’s new loan demand declined sharply in December.
Better-than-expected US retail sales figures for December earlier this week had pushed the local currency below 90 US cents.
Meanwhile, Australian bond futures prices are firmer.
At 1200 AEDT on Thursday, the March 2014 10-year bond futures contract was trading at 95.865 (implying a yield of 4.135 per cent), up from 95.815 (4.185 per cent) on Wednesday.
The March 2014 three-year bond futures contract was at 97.060 (2.940 per cent), up from 96.970 (3.030 per cent).
— with ABC