Australia, NZ dollars tumble to multi-week lows, bonds battered

By Wayne Cole

SYDNEY, Sept 24 (Reuters) - The Australian and New Zealand dollars languished near multi-week lows on Thursday after red-hot US economic data boosted the greenback across the board, while a renewed rout in global bond markets drove yields to 15-year peaks.

Domestic data showing a surprise rise in unemployment added to the Australian dollar's woes, nudging it to a seven-week low of $0.7025 after a 1% overnight slide. The drop breached multiple moving averages, turning the technical outlook bearish and risking a retreat to $0.6920 and $0.6866.

The kiwi dollar was pinned at $0.5676 , having also shed 1% overnight. A test of the June low at $0.5627 now looks likely, with scope for a decline to $0.5581.

The selloff in risk assets overshadowed figures showing Australian employment rebounded by a solid 39,500 in August, well above forecasts for a gain of 20,000.

Yet the jobless rate still edged higher to a five-year top of 4.6% as more people entered the labour force, suggesting supply was rising to meet the demand for workers.

That will be of some comfort to Reserve Bank of Australia Governor Michele Bullock who has said unemployment between 4.5% and 5.0% was needed to help loosen the labour market.

"Even so, inflation pressures extend well beyond the labour market, with oil above $100 a barrel and core inflation stuck at 3.6%," said Oscar Guth, an economist for Oxford Economics Australia.

"With unemployment still at the bottom of the band Bullock outlined, we expect the RBA to hike rates at its meeting next week."

Markets imply a 95% chance the RBA will lift its cash rate by 25 basis points to 4.60% when it meets on September 29, and a possible peak of 5.10%.

The probability of an October hike from the Reserve Bank of New Zealand has climbed to 87%, from 20% a couple of weeks ago. Rates are seen rising 25 basis points to 3.0%, and markets are even flirting with an eventual top of 4.0%.

The hawkish shift combined with selling in global bond markets to send Australian 3-year bonds futures sliding 15 ticks to 94.900 and lows last seen in mid-2011.

Key NZ 2-year swap rates surged 15 basis points to 4.1179%, the highest since August 2024, while 10-year bond yields spiked to 5.103%.