By Cecile Lefort and Charlotte Greenfield
SYDNEY/WELLINGTON, May 18 (Reuters) - The Australian dollar gained on Thursday after the domestic jobless rate fell to a four-month low, supporting the case for a stable interest rate outlook in the near term. The New Zealand dollar steadied near two-week highs.
The Australian dollar AUD=D4 rose for the seventh session to $0.7453, having recouped earlier losses when it touched $0.7409. It briefly popped to $0.7457 after Australian unemployment dropped in April to 5.7 percent, beating forecasts of a steady rate of 5.9 percent.
Also helping the mood was the creation of 37,400 jobs in April versus expectations of 5,000, even though all the increase came from part-time employment. ID:nL4N1IK1DG
"Overall, these figures further reduce any lingering chances of more rate cuts," said Paul Dales, chief economist at Capital Economics in Australia.
"But the labour market won't prompt the RBA to hike rates for a long time yet."
Interbank futures 0#YIB: imply a 16 percent chance of a rate cut to a record low of 1.25 percent by December.
Resistance was found around $0.7470 with support at $0.7420.
The euro edged off eight-month lows to stand at A$1.4959 EURAUD=R . Against the New Zealand dollar EURNZD=R , it hovered at NZ$1.6092, not far from a one-year peak of NZ$1.6151 touched on Wednesday.
After struggling against the Antipodean currencies since late last year, the euro smartly rebounded in February, to stand 13 cents and 16 cents stronger against the Aussie and the Kiwi, respectively.
The New Zealand dollar NZD=D4 edged lower to $0.6928, having recovered from an 11-month trough touched last week following comments from the Reserve Bank of New Zealand (RBNZ).
The currency was, "threatening a break above the two-week old consolidation pattern roughly bounded by $0.6850 and $0.6950, supported by the breakdown in the U.S. dollar," said Imre Speizer, currency strategist at Westpac Bank.
Though the move was largely on greenback weakness, it also showed investors were shaking off some of their uncertainty towards the kiwi after the RBNZ failed to adopt the more hawkish tone they had been expecting last week. Zealand government bonds 0#NZTSY= gained, sending yields 5.5 basis points lower at the long end of the curve.
Australian government bond futures rose to multi-week peaks, with the three-year bond contract YTTc1 up 2 ticks at 98.240. It climbed as far as 98.270, the highest since November. The 10-year contract YTCc1 leapt 5.5 ticks to 97.4950, while the 20-year contract YXXc1 was 4.5 ticks higher at 96.9150. (Editing by Simon Cameron-Moore)