BLBG:Aussie Dollar Gains Second Day as Employers Added More Jobs Than Forecast
The Australian dollar rose for a second day after a report showed the nation’s employers added more jobs in June than economists forecast, easing concern that the nation’s economy is losing momentum.
The so-called Aussie climbed against all 16 of its major peers as the employment gains ended a two-month decline and traders pared bets on an interest-rate cut by the Reserve Bank of Australia this year. New Zealand’s currency was 0.7 percent from a five-week high against the yen as an increase in oil prices and stocks boosted demand for higher-yielding assets.
“There’s overall a fairly tight labor market and it keeps the policy direction of the RBA still pointing toward hikes,” said Greg Gibbs, a currency strategist at Royal Bank of Scotland Group Plc in Sydney. “The currency’s been extremely resilient to global factors and is bouncing because the data shows the economy is fairly well balanced.”
Australia’s dollar rose to $1.0746 as of 1:35 p.m. in Sydney from $1.0701 in New York yesterday, when it reached $1.0655, the least since June 29. The currency gained 0.4 percent to 86.89 yen. New Zealand’s dollar bought 82.76 U.S. cents from 82.70 cents yesterday. It traded at 66.91 yen from 66.92 after reaching 67.34 on July 5, the most since May 31.
The number of people employed rose by 23,400, led by a jump in full-time jobs, the statistics bureau said today. That was higher than the median estimate for a 15,000 increase in a Bloomberg News survey of economists. The jobless rate held at 4.9 percent. Employment dropped by a revised 500 in May following a 28,300 decline in the previous month.
Trend Growth
Futures traders are betting on a 36 percent chance that the key rate will be cut to 4.5 percent by December, Bloomberg calculations using cash rate future contracts show. That’s down from a 42 percent probability yesterday. As recently as June 15 there was a 44 percent chance of a rate increase priced in.
The RBA on July 5 left its key rate unchanged and said the nation’s growth pace may be weaker than previously forecast.
“Over the medium term, overall growth is still likely to be at trend or higher, if the world economy grows as expected,” Governor Glenn Stevens said in a statement accompanying the decision.
Benchmark rates are 4.75 percent in Australia and 2.5 percent in New Zealand, compared with as low as zero in the U.S. and Japan, attracting investors to the South Pacific nations’ higher-yielding assets. The risk in such trades is that currency market moves will erase profits.
Australia’s benchmark 10-year bond yield fell one basis point, or 0.01 percentage point, to 5.20 percent.
New Zealand’s two-year swap rate, a fixed payment made to receive floating rates which is sensitive to interest-rate expectations rose, was little changed at 3.36 percent.
The MSCI Asia Pacific Index of regional stocks advanced 0.2 percent.
To contact the reporter on this story: Candice Zachariahs in Sydney at czachariahs2@bloomberg.net;
To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net
