Australian dollar hits US87.25c on June employment figures .

THE Australian dollar surged today, pushing the currency to its highest levels against the greenback so far this month.

The jump behind the Aussie came on the back of a robust report on the country's labour market earlier during the trading session.
Australian bonds fell sharply on the jobs report, particularly on the short-end of the curve, as traders re-evaluated the prospects for future rate hikes by the Reserve Bank of Australia.
For June, Australia's number of employed rose 45,900 while the unemployment rate came in at a seasonally adjusted 5.1 per cent, the Australian Bureau of Statistics said. Economists, on average, had expected an unemployment rate of 5.2 per cent in June, with the number of employed up just 15,000.
After already surging overnight on the back of a banks-led stock rally in the US, the morning jobs report lifted the Australian dollar against nearly all crosses. Global economic worries had weighed on the currency and pushed it lower for much of the past two weeks, but this week has been met with steady buying pressure.
Even so, John Horner, head of foreign exchange strategy for Deutsche Bank, said just because the currency was rallying doesn't mean those economic concerns have disappeared.
“For the moment, the market is trying to look on the brighter side of things. But we remain concerned that with the US labour market showing signs of faltering and further evidence coming out that the US housing market is slowing, this risk rally won't prove sustainable,” said Mr Horner.
In addition, the currency is notably near the high point of its recent range. At 0620 GMT, the Australian dollar was quoted at US87.25 cents, up from US84.83c late yesterday. Since the middle of May, the cross has stayed mostly between US81c and US88c, finding heavy pressure on both ends of that range.
Against the Japanese yen, the Australian dollar was recently at Y77.105 from Y74.20.
In the wake of the Australian jobs report, market participants and economists reconfigured their rate-hike expectations for the RBA. Given the central bank has now paused in its last two meetings, there had been growing expectations the bank may be in a holding pattern for some time.
But with jobs growth surging, market bets on an August rate-hike jumped. The 30-day interbank futures market was recently pricing in a 25 per cent chance for a hike in August, up from below 10 per cent prior to the report.
TD Securities strategist Roland Randall said there's more room for those rate-hike expectations to grow.
With the market changing its RBA views, the short-end of the curve was particularly vulnerable. The three-year September contract lost 13 ticks to 95.35 and the 10-year bond fell 7.5 ticks to 94.885.