The Australian dollar has pushed to new four-month highs against the US dollar and euro, even as new US jobs data shows a recovery from the impact of a severe winter.
The local currency rose to a fresh four-month high of US93.08¢ early Saturday morning as the US dollar fell when a robust non-farm payrolls report failed to meet the market's heightened expectations.
The Australian dollar jumped by around half a cent after the release of US jobs data. Photo: Bloomberg
The Australian dollar, which had been weakening slightly last week as it looked for new reasons to strengthen, soared by more than half a cent when the American figures were released.
It kept some of its gains and was fetching US92.27¢ late Monday.
''We were all a bit startled to see how poorly the US dollar had traded,'' Westpac senior currency strategist Sean Callow said.
''It was matched by lower yields. [10-year] US Treasuries essentially went from just short of 2.80 per cent back to 2.72 per cent, so it does seem as though there was a lot more optimism built into the US dollar ahead of the employment report.''
At the same time, a report the European Central Bank (ECB) had modelled bond buying as a way to stave off deflation saw investors flee the currency.
The report, in the Frankfurter Allgemeine Zeitung newspaper, came after the ECB had pledged to further ease monetary conditions earlier last week.
The Australian dollar surged to a four-month high against the euro, reaching 68.04 euro cents on Saturday morning.
It eased back slightly and was buying 67.71 euro cents late Monday.
''The fact that they are talking about it has taken some heat out of the euro, and speculators do love punishing the euro," Mr Callow said. "You know you've got the official blessing."
Reserve Bank of Australia officials might be frustrated at the continued strengthening in the local dollar, though the central bank has been fairly tolerant of the currency's gains this year, he said.
The direction of the local currency this week could be determined by the March unemployment figures, which will be released by the Bureau of Statistics on Thursday.
Analysts expect the jobless data to edge up to 6.1 per cent, a new decade-high, and for 2500 jobs to be added to the economy.
A stronger-than-expected report could push the dollar back above US93¢, OzForex currency strategist Jim Vrondas said.
"Markets are still thinking rate rises are a long way off . . . but they may begin to bring this forward and when they do it would trigger a sharp but temporary rise towards parity."
At the same time, the US Federal Reserve is set to publish the minutes of its recent FOMC meeting later this week.
The meeting saw the central bank flag a sooner-than-expected increase in US interest rates next year.
''A hawkish tone in the upcoming . . . minutes could quickly tip the scales in the greenback's favour,'' FXCM analyst David de Ferranti said.