Poor Australia jobs data increase chance of RBA rate cut

The Australian dollar has tumbled to new 5 – ½ year low after very disappointing domestic jobs data on Thursday.

The unemployment rate jumped to its highest level since May 2002 to 6.4 percent in January.

The total number of people with jobs fell by 12,200 with worse than expected job losses of 5000, the bulk of which were in full-time employment. Full-time employment fell by 28,100.

Almost immediately after the employment data release the local currency fell by 0.7 per cent to US76.60¢ and reached as low as US76.46¢ by late afternoon in Sydney.

The data increase the changes of a rate cut by the Reserve Bank of Australia.

Meanwhile, declining commodity prices continued to drag the Australian dollar down, with iron ore losing 0.3 per cent overnight on Wednesday to $US61.18 a tonne.

The market expectation of a rate cut in March shot up following the poor jobs report, with economists forecasting a 68 per cent chance of a rate cut in March, up from 43 per cent before the jobs data release.

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