The Australian dollar brushed aside early softness to edge back towards 91 US cents as strong domestic economic data fuelled expectations interest rates would rise again in the next month or two.
At the local close, the dollar was trading at $US0.9094, up from an early $US0.9072 low but marginally down from yesterday’s close of $US0.9109.
It edged back to 81.85 yen, from a 82.14 high, giving back some of the gains made Monday, when global sentiment was still showing the benefit of the US payrolls report.
Job advertisements rebounded with their biggest increase on record in February while business confidence and activity improved, seemingly auguring well for another upbeat employment report on Thursday.
"Another positive employment report is on the cards this week," said Annette Beacher, a senior strategist at TD Securities who is anticipating a rise of 25,000 in jobs.
"Another strong rise in employment would increase the chances of an April hike by the RBA," she added. "The unemployment rate continues to inch down towards 5 per cent, confirming spare capacity in the labour market has all but dried up."
The median forecast had been for a 15,000 rise in employment, with the jobless rate steady at 5.3 per cent, but the market will be leaning toward something higher now.
ANZ's measure of job advertisements jumped 19.1 per cent in February, suggesting the blistering pace of employment growth in recent months has further to run.
A separate survey on Tuesday showed business activity and confidence improved to historically high levels in February, with the mining sector leading the pack.
Combined, the upbeat data led investors to nudge the probability of a rate rise in April to 34 per cent, from as low as 22 per cent last week.
April interbank futures slipped 0.005 point to imply a one-month rate of only 4.065 per cent, but June was fully priced for a hike at 4.29 per cent.
The Reserve Bank of Australia (RBA) lifted its cash rate by 25 basis points to 4.0 per cent last week, its fourth move since October, as the economy continued to surprise with its strength.
Investors are pricing in further tightening toward 5 per cent by year-end, easily the most aggressive outlook for interest rates in any developed nation.
The robust data left Australian bond futures mixed as it flattened the yield curve. Three-year futures slipped 0.015 points to 95.025, while the ten-year contract added 0.025 points to 94.470.
Reuters
