Forex - Aussie up on robust jobs data for May, Greece weighs on euro

Investing.com - The Australian dollar gained smartly Thursday after a surge in jobs added in the latest monthly report was nearly four times expected levels.

Australia added 42,000 jobs in May, compared to 11,000 jobs seen, taking the unemployment rate to 6.0%, the lowest in a year and well below the 6.2% expected though the participation rate fell slightly to 64.7% from 64.8%.

Earlier, the Melbourne Institute annual inflation expectations showed June at 3.0% compared to 3.6% in May.

AUD/USD changed hands at 0.7758, up 0.26%, after the data. In Japan, USD/JPY was quoted at 123.15, up 0.42%. EUR/USD traded at 1.1285, down 0.34%.

Earlier, the kiwi fell sharply Thursday after the Reserve Bank of New Zealand surprised markets and cut benchmark rates, signaling it is ready to act like other regional central banks in boosting growth prospects as inflation remains well in check.

NZD/USD traded at 0.7015, down 1.44%, after the decision.

The Reserve Bank of New Zealand on Thursday cut its Official Cash Rate by 25 basis points to 3.25%, the latest central bank in Asia to ease monetary policy.

The decision came as a surprise to majority of economists who expected governor Graeme Wheeler to hold the OCR at this quarterly meeting, but to signal rate cuts late in the year. Market was pricing around 60% chance of a 25 basis points cut.

Instead the New Zealand central bank signaled growing concern about the effect of falling commodity prices, especially dairy, on the country's' economy, and minimal consumer price index (CPI) inflation levels.

Greece's Prime Minister Alexis Tsipras ended talks with key European leaders in Brussels Wednesday without solid progress towards reaching an agreement with international creditors.

The meeting included Germany's Chancellor Angela Merkel and France's President Francois Hollande in an effort to broker a political solution to present to the European Commission, the International Monetary Fund and the European Central Bank.

"We agreed to intensify the efforts in order to bridge the gaps and proceed to a solution," Tsipras told journalists as he left the Summit. "I think the EU leadership realises that they must agree to a viable solution, and the possibility for Greece to return to social cohesion with security and growth but also with a sustainable debt."

Earlier on Wednesday, S&P unexpectedly downgraded Greece's debt rating to CCC from CCC+ and warned that, absent a deal with its creditors, Greece could default on its commercial debt within the next 12 months.

Tsipras is scheduled to hold a bilateral meeting with European Commission President Jean-Claude Juncker in Brussels Thursday.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.32% to 94.88.

Overnight, the dollar remained at three-week lows against a basket of other major currencies on Wednesday, as investors continued to lock-in profits from the greenback's broad rally last week and as trading was expected to remain quiet with no major U.S. data due throughout the day.

A selloff in European government bonds continued, with German 10-year bund yields rising to the highest levels since September 2014 earlier Wednesday.

German bund yields act as benchmarks for European financial markets and higher yields push the euro higher against the dollar. Yields rise as prices fall.