The Australian dollar edged back today as a three-session rally drew some profit-taking, though it held most of its recent gains helped by expectations of extended stimulus in the Unites States.
The Australian dollar closed locally at 98.79 US cents, having surged around 1.7 per cent to as far as 99.38 US cents on Friday in a major turnaround from last week's 95.35 US cents trough.
The currency was supported by a domestic data showing a healthy 2.9 per cent rise in job advertisements in November which augured well for an upbeat reading from the official employment report due on Thursday.
Analysts are looking for a solid rise of around 19,000 in employment and drop in the jobless rate back down to 5.2 per cent. Such a result would help offset a run of softer data recently and keep the Reserve Bank on inflation watch.
"Jobs should remain an ongoing key support to household income - which coupled with an on-hold RBA over coming months - should help consumption to pick-up ahead, after some patchiness recently," said George Tharenou, an economist at UBS.
The RBA holds its December policy meeting on Tuesday but there is virtually no chance of them lifting the 4.75 percent cash rate after Governor Glenn Stevens said the market was reasonable in pricing in the next move around mid-2011 .
Still, the RBA's tightening bias stands in stark contrast with the US Federal Reserve. In a TV interview, chairman Ben Bernanke said it was certainly possible the central bank could buy more than $US600 billion of bonds if the economy needed it and noted it could take four to five years for unemployment to fall to more normal levels.
It was the prospect of extended stimulus that helped commodity and stock markets rally on Friday despite a disappointing US payrolls report, which in turn helped lift the Australian dollar.
The Aussie currency now faces major resistance around 99.55 US cents which marked a peak back on November 22, with support from 98.85 US cents below which 98.21 US cents, the 20-day moving average.
Reuters