SYDNEY (Reuters) - The Australian dollar bounced from near five-month lows on Thursday as a mostly upbeat employment report triggered a round of short-covering, while its New Zealand counterpart extended its recent decline.
The Australian dollar <AUD=D4> was holding on at $0.7596, after delving as deep as $0.7567 overnight amid a general mood of risk aversion globally.
Dealers reported support around $0.7570 but felt it needed to get back above $0.7640 to avoid a further correction to at least $0.7535.
It won a reprieve from selling pressure when data showed Australia's jobless rate dipped to 5.4 percent in October, its lowest since early 2013.
Employment missed estimates with a rise of just 3,700, but that was offset by a 24,300 gain in full-time work.
Yet with plenty of slack left in the labour market and wage growth near all-time lows, investors still saw no chance of a rate hike <0#YIB:> for months to come.
In contrast, the Federal Reserve seems determined to raise U.S. rates in December and up to three more times next year, which would take the U.S. cash rate above Australia's for the first time since 2000.
"It now looks inevitable at the central bank policy rates level, the real questions being how far along the yield curve rates might cross-over, and the market's take on how long they are likely to remain there," said Ray Attrill, NAB's head of forex strategy.
The gap between Australian and U.S. two-year government yields is already down to just 11 basis points and the spread on five-year debt is only a whisker more at 15 basis points.
That is one reason Attrill expects the Aussie to slip into a new trading range of $0.7000 to $0.7500 next year.
The New Zealand dollar <NZD=D4> was trading down 0.3 percent at $0.6854 and threatening chart support at $0.6844.
A survey out on Thursday showing consumer confidence slipped in November as a slowing housing market and political uncertainty dampened optimism.
The index was still relatively strong at 123.7, well above the 100 level where pessimists equal optimists.
New Zealand government bonds <0#NZTSY=> rallied, pushing yields down as much as 5 basis points at the long-end of the curve.
Australian government bond futures paused after notching solid gains on Wednesday. The three-year bond contract <YTTc1> eased 2 ticks to 98.030, while the 10-year contract <YTCc1> was flat at 97.3950.
(Reporting by Wayne Cole; Editing by Eric Meijer)
