The Australian dollar strengthened to around $0.679 on Thursday, approaching a sixteen-month high, as easing US-Europe tensions improved risk sentiment, while strong local jobs data boosted bets on a near-term rate hike. Data showed employment surged by 65,200 in December, well above forecasts, while the unemployment rate unexpectedly fell to a seven-month low of 4.1%. The robust result, along with rising household spending, suggests the economy is accelerating faster than expected. This prompted markets to sharply lift bets for a 25bp rate hike at the Reserve Bank’s February 3 meeting, with the odds jumping to 54% from 27% before the data, and a hike now fully priced by May. Attention now turns to next week’s December-quarter CPI data, where a core inflation increase could push an earlier policy move. Meanwhile, US President Trump ruled out taking Greenland by force and said would not now impose tariffs on European nations. He also announced a framework of a deal had been reached.