Aussie gains, bonds tumble as jobs data crushes easing bets

By Stella Qiu

SYDNEY, Nov 13 (Reuters) - The Australian dollar gained on Thursday as a solid jobs report led markets to virtually price out the chance of any more policy easing, while bonds tumbled to their lowest in nearly eight months.

That drove the Aussie to a new 12-year top against the kiwi at NZ$1.1614 as markets bet on a diverging policy outlook, with the Reserve Bank of New Zealand set to cut interest rates by 25 basis points this month.

The Aussie AUD=D3 rose 0.3% to $0.6558, its highest in 10 days, having popped 0.2% higher overnight. It is up 0.9% this week, helped in part by expectations for an imminent end to the U.S. government shutdown.

President Donald Trump signed a funding bill on Wednesday that ended the longest government shutdown in U.S. history.

Thursday's jobs data showed Australia's employment jumped by 42,200 in October, while the jobless rate fell back to 4.3% from a four-year high of 4.5% in September.

The detail was firm with full-time jobs surging 55,300 while hours worked rose another solid 0.5%.

The National Australia Bank gave up its call for one final rate cut in May next year, saying it now expected the RBA to be on hold for the foreseeable future.

"Should data continue to suggest an acceleration in growth, evidence of a tighter labour market or further margin expansion, then the outlook for Australian monetary policy could shift in a less benign direction," said Sally Auld, chief economist at NAB.

The jobs report added to a slew of upbeat data - from housing finance to surveys of consumer and business sentiment - that suggested there is little urgency for the RBA to ease policy in the debate whether it is restrictive, with the cash rate at 3.6%.

Three-year government bond futures YTTc1 tumbled 12 ticks to 96.165, the lowest since late March. Swaps imply a total easing of just 9 basis points for next year, less than one rate cut.

On the other hand, the kiwi NZD=D3 was 0.2% lower at $0.5657, after edging up 0.2% overnight. Support lies at a seven-month trough of $0.5606.

"Normally we would expect NZD to experience a low-beta move, but in the same direction (to AUD). This suggests investors are likely adding to long AUD/NZD positions," Nomura analysts told clients in a note.

"We think the consensus may shift to our view that the RBA easing cycle is likely over."