BLBG: Australian Dollar Advances for Second Day as Government, Miners Reach Deal
Australia’s dollar climbed against most of its 16 major counterparts after Prime Minister Julia Gillard reached an agreement with mining companies on a new resources tax, boosting demand for the nation’s assets.
The Aussie and the New Zealand dollar each gained for a second day as government data showed U.S. nonfarm payrolls shed fewer jobs in June than forecast after a drop in temporary government positions was eased by private-sector hiring. Australia’s benchmark stock gauge, the S&P/ASX 200 Index, ended eight days of declines.
“The mining-tax agreement is obviously a positive for Australia,” said Tony Allen, head of currency trading at ANZ National Bank Ltd. in Wellington.
Australia’s currency appreciated as much as 0.9 percent to 85.11 U.S. cents before trading at 84.46 cents at 11:29 a.m. in New York, up 0.1 percent from 84.34 cents yesterday. The currency advanced 0.4 percent to 74.15 yen. New Zealand’s dollar, nicknamed the kiwi, rose 0.1 percent to 69.16 U.S. cents and strengthened 0.3 percent to 60.69 yen.
The Aussie and kiwi still had their biggest weekly losses in since May, 3.3 percent and 3.1 percent, respectively, as concern that growth is slowing in nations such as China prompted investors to sell riskier assets. China is Australia’s largest trading partner.
Australia’s mineral-resources rent tax will be 30 percent, applying to iron ore and coal, while a tax on oil and gas resources will be 40 percent, the government said in a statement. Gillard’s predecessor, Kevin Rudd, had proposed a 40 percent tax on all resources.
Political Stability
“The content of the deal is not really the issue for the currency market,” said Greg Gibbs, a foreign-exchange strategist at Royal Bank of Scotland Group Plc in Sydney. “It is the political stability that it will tend to engender.”
U.S. payrolls fell by 125,000 last month, a Labor Department report showed today, compared with a decrease of 130,000 forecast by economists in a Bloomberg News survey. The government cut 225,000 temporary workers conducting the 2010 census, it showed.
The number of jobs outside government rose by 83,000 last month, the report showed, compared with a gain of 110,000 estimated in a Bloomberg survey and a revised increase of 33,000 in May.
The S&P/ASX 200 rose as much as 1 percent before ending the day up less than 0.1 percent.
To contact the reporters on this story: Candice Zachariahs in Sydney at czachariahs2@bloomberg.net; Catarina Saraiva in New York at asaraiva5@bloomberg.net.
