By Cecile Lefort and Charlotte Greenfield
SYDNEY/WELLINGTON, May 19 (Reuters) - The Australian dollar fell to a two-and-a-half month low on Thursday after mixed jobs data sparked some speculative selling though the numbers were unlikely to build the case for an imminent rate cut by the Reserve Bank of Australia (RBA).
The Aussie AUD=D4 dropped as low as $0.7209, a level not seen since early March, from $0.7232 early and was last traded at $0.7214. A sustained break under $0.7212 would target a major retracement level of $0.7063.
A total of 10,800 net new jobs were created in April, slightly undershooting forecasts of 12,500, with the unemployment rate staying at its lowest in more than two years. headline numbers are not too bad but the details are a little softer and consistent with a moderating labour market," said Su-Lin Ong, a senior economist at RBC Capital Markets.
"It's clearly consistent with the RBA's easing bias," she said, seeing a 25 basis-point cut in interest rate in June to a record low of 1.5 percent.
Still, interbank futures 0#YIB: are pricing around a one-in-10 chance of a cut by mid-year and are fully priced for a move by the end of the year.
The Aussie had already skidded 1.3 percent on Wednesday on rising expectations that the U.S. Federal Reserve (Fed) may hike as early as June. New Zealand dollar NZD=D4 was also licking its wounds from the Fed downdraft at $0.6742, having fallen 1 percent overnight.
Key support was found at 67 cents, the 50 percent retracement of the January-May move.
It received some modest support after an ANZ survey showed that local job ads added 4.6 percent from a year ago, suggesting strength in the labour market. Zealand government bonds 0#NZTSY= eased, sending yields 6.5 basis points higher at the long end of the curve.
Australian government bond futures extended losses, with the three-year bond contract YTTc1 off 3 ticks at 98.380. The 10-year contract YTCc1 shed 6 ticks to 97.6550, while the 20-year contract YXXc1 dropped 6.5 ticks to 97.0200. (Editing by Richard Borsuk)