Employment data energise Aussie dollar The Australian dollar surged on Thursday morning as positive jobs data reduced expectations of an interest-rate cut by the Reserve Bank of Australia in May and provided a fillip for a currency that has struggled in the face of slowing Chinese demand. The Aussie bounced 0.8 per cent to $1.0387 against the US dollar and 1 per cent against the Japanese yen to Y84.19 after employment data showed the Australian economy added 44,000 jobs in March, almost seven times analysts" expectations of 6,500. Market observers had been pricing in an interest-rate cut of some 25 basis points by the RBA when it next meets in May but a strengthening economy would reduce the need for such action. Analysts noted, however, that since Australia's unemployment series tends to be very volatile, an interest-rate cut might still be on the table and this surge may present a selling opportunity. And Bank of Tokyo-Mitsubishi's Lee Hardman said he doubted the "employment reading will have a material impact on reducing the probability of RBA easing with other data still consistent with sub-trend economic performance." "The RBA have already clearly flagged that the inflation data for Q1 which is released on April 24 will be more important for their upcoming decision which, providing it remains subdued, should leave the door open for a rate cut," Mr Hardman said. The Australian currency is still very dependent on signals from China's economy and will await China's first-quarter gross domestic product data, to be released on Friday, with bated breath. The dollar index lost 0.2 per cent to 79.66 after Janet Yellen, vice-chair of the US Federal Reserve, said further monetary easing may be needed if growth is slower than expected but argued that a range of policy rules suggested keeping interest rates close to zero until as late as 2015. Ms Yellen's speech suggested that while the Fed does not think a third round of quantitative easing is needed at present it does believe rates will need to stay low for a long time. The Japanese yen fell 0.3 per cent against the dollar to Y81.07 as mild risk-on sentiment combined with a dovish statement from Bank of Japan governor Masaaki Shirakawa hit the currency. Mr Shirakawa's overnight pledge to continue a policy of "powerful monetary easing" in order to overcome deflation and return to sustainable growth also pushed the yen down 0.3 per cent against the euro to Y106.35 and 0.4 per cent against sterling to Y129.17. And as the BoJ steps up its efforts to push down the yen, the search for haven currencies becomes ever more difficult. Rabobank's Jane Foley argues that with the yen's appeal fading and the smaller Scandinavian currencies such as the Norwegian krona lacking liquidity, sterling may benefit. The sterling index was near 13-month highs on a trade weighted basis and gained a further 0.2 per cent to 82.4 on Thursday morning. Sterling also ticked 0.1 per cent against the euro to £0.8236, even as the euro ticked up 0.1 per cent against the US dollar to $1.3121. While the single currency barely reacted to Italy's somewhat weak bond auction on Thursday morning, which saw Italy's borrowing costs widen 113bp over its previous sale of three-year notes on March 14.