The Australian dollar rose to a five-week high yesterday after data showed the nation recorded its strongest monthly employment growth in almost 12 years last month, diminishing the chance of further immediate interest rate cuts that might push the currency lower.
At 5pm AEDT, the dollar was buying $US1.0364, up US0.5c.
The number of people employed rose by 71,500 from January, driven by a surge of 53,700 part-time workers, according to Australian Bureau of Statistics data. Economists had expected a 10,000 increase overall in the job market.
Still, the unemployment rate remained at 5.4 per cent last month as more people actively sought work during the month.
Traders said the surge in job creation, while subject to statistical volatility, argued strongly against further cuts in interest rates.
"This seems likely to reinforce the RBA's confidence that sitting on their hands is the right stance," said Sue Trinh, currency strategist at RBC Capital Markets in Hong Kong.
Financial markets are now pricing in a further 10 basis points of interest rate cuts by the RBA, down from 50 basis points last month.
The RBA last week kept interest rates on hold for the second month at 3 per cent, matching a low reached after the global financial crisis.
It cited a nascent recovery in key parts of the economy, including housing and retail.
Justin Fabo, an economist at ANZ Bank, said markets had moved quickly to trim back expectations of further interest rate cuts. He added that if the unemployment rate had already peaked at 5.4 per cent, the RBA could move to the sidelines.
ANZ's official forecasts still call for another two 25-basis-point cuts this year.
