THE dollar opened higher today after strong domestic employment data sparked speculation of an August interest rate rise by the Reserve Bank of Australia (RBA).
At 7am (AEST), the dollar was trading at $US0.8774/75, up from yesterday's close of $US0.8739/41.
Since its previous local close at 5pm (AEST), the local dollar traded between $US0.8792 and $US0.8692.
Latitude FX executive sales manager Steve Jardine said the unit gained after the Australian Bureau of Statistics (ABS) yesterday reported the unemployment rate fell to 5.1 per cent in May and stayed there in June. It was the lowest jobless rate since January 2009.
"The Aussie was up, up and away," Mr Jardine said.
"Those numbers yesterday, the employment data, caught a lot of people by surprise. Since that happened away it went. It's just continued on overnight, as well."
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Mr Jardine said the data increased the likelihood that the RBA would lift the cash rate again by the end of the year, over fears that low unemployment and wage pressures will increase the rate of inflation.
He said an August rate rise was a possibility.
"I think the RBA will be reviewing that," Mr Jardine said.
"There's an outside chance we might see rate rises again before the end of the year."
The RBA board decided on Tuesday to leave the cash rate at 4.5 per cent.
The ABS data yesterday showed total employment rose by 45,900 to 11.101 million in June, seasonally adjusted. Full-time employment rose by 18,400 to 7.795 million in the month and part-time employment was up by 27,500 to 3.306 million.
The forecast was for total employment to have risen by 15,000.
Mr Jardine said he expected the local dollar to continue moving higher during the domestic session, meeting resistance at $US0.8850.
"If we break through there, it looks like we will test 90 US cents again," he said.
Dollar higher on job numbersCensus layoffs distort job numbers
