Forex - Aussie surges on jobs data beating expectations, eyes on RBA

Investing.com - The Australian dollar surged on Thursday after better than expected jobs data that likely dims chances a bit for a central bank rate cut in May.

AUD/USD traded at 0.7766, up 1.13%, while USD/JPY changed hands at 118.93, down 0.18%. EUR/USD traded at 1.0721, up 0.35%.

Australia reported that 37,700 jobs were added month-on-month in March, more than double the 15,000 expected and that the unemployment rate dipped to 6.1%, below the expected steady 6.3%, but the participation rate edged up to 64.8% from 64.6% seen.

The data reduces slightly the odds of a Reserve Bank of Australia cash-rate cut in May.

Earlier, in Australia, the MI April inflation expectations data showed a rise to 3.4% from 3.2% in March, a surprising outcome though possibly accounting for views on a weaker Australian dollar.

Foreign direct investment into China rose 11.3% year-on-year to $34.88 billion in the first quarter.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was flat at 98.25, down 0.30%.

Overnight, the dollar trimmed gains against a basket of other major currencies on Wednesday, after data showed that manufacturing conditions in the New York area contracted unexpectedly in April and that U.S. industrial production fell more than expected last month.

In a report, the Federal Reserve Bank of New York said that its general business conditions index decreased to -1.2 this month from a reading of 6.9 in March. Analysts had expected the index to inch up to 7.0 in April.

Data also showed that U.S. industrial production declined 0.6% last month, worse than expectations for a drop of 0.3%. Industrial production rose by 0.1% in February.

Meanwhile, manufacturing production inched up 0.1% in March, in line with forecasts and following a drop of 0.2% in February.

The euro pared losses after European Central Bank President Mario Draghi played down speculation that recent signs of a recovery in the euro zone economy could see the bank scale back its buying program.

He said there is "clear evidence" that the policy measures are effective and added that borrowing conditions for firms and households have "improved notably".

The ECB is monitoring inflation closely the ECB chief said, and it still expects inflation to rise back towards its target in 2016 and 2017.

The ECB maintained its benchmark interest rate at a record-low 0.05%, in line with market expectations. The central bank also held its marginal lending at 0.30% and left its deposit facility rate unchanged at minus 0.20%.

Draghi was expected to discuss the effects of the bank's €1.1 trillion quantitative easing program on the region's economy at the press conference.

Investors anticipating a collapse in negotiations between Greece and its euro zone creditors could scurry to gold as a safe haven. Greek officials face a Monday deadline from the euro zone's working group to present a revised list of reform measures deemed necessary to unlock a critical stimulus package. The financial lifeline is considered vital for Greece to stave off bankruptcy.

While delivering a speech in New York, German finance minister Wolfgang Schaeuble told the Council of Foreign Relations that he thinks it is unlikely that Greece will reach a deal with the euro zone at a meeting next week in Latvia or anytime in the coming weeks.

Meanwhile, Greece's cash reserves could enter into negative territory next week after the deadline on Monday but ahead of the meeting in Riga, according to Reuters. In recent weeks, officials in Athens have reportedly hinted that it will meet its pension and wage obligations before repaying its debts to a troika of creditors.

When asked on Wednesday how a possible Greek default could roil markets, Draghi demurred, saying that he did not even want "to contemplate" the possible implications.

Earlier this week, International Monetary Fund chief economist Olivier Blanchard said the euro zone has better mechanisms and firewalls in place than it did five years ago to guard against contagion if Greece leaves the euro zone.