BLBG:Australia, New Zealand Dollars Set for Weekly Gain Before U.S. Jobs Report
The Australian and New Zealand dollars were set for a weekly gain against most major peers before U.S. data forecast to show employers added workers at a faster pace, boosting demand for higher-yielding assets.
New Zealand’s currency headed for its biggest five-day advance versus the dollar since May 2009 before German Chancellor Angela Merkel outlines her stance for a Dec. 9 European summit on the region’s debt crisis. Gains in the so- called Aussie may be limited before the Reserve Bank of Australia holds a policy meeting on Dec. 6.
“The Aussie will be stable to higher with recent data coming out of the U.S. relatively strong,” said Derek Mumford, a Sydney-based director at Rochford Capital, a currency-risk management firm. “We could see a rally over the next few weeks, but the reality is that things aren’t that good.”
Australia’s dollar traded at $1.0221 at 4:21 p.m. in Sydney from $1.0244 in New York yesterday, set for a 5.3 percent weekly advance. The currency fetched 79.54 yen from 79.59 yen. New Zealand’s dollar bought 78 U.S. cents from 77.94, rising 5.3 percent since Nov. 25, the most since the five days ended May 22, 2009. It climbed 0.2 percent to 60.70 yen from yesterday.
U.S. payrolls rose by 125,000 in November after an 80,000 gain the previous month, the Labor Department is forecast to say today, according to the median estimate in a Bloomberg News poll.
The MSCI Asia Pacific Index (MXAP) of stocks was little changed today, heading for a 7.6 percent advance this week.
Merkel Speech
Merkel is set to push her demand for tighter economic ties in Europe as the only way forward after repeating her call to rework European Union rules to lock in budget monitoring and enforcement and seal off the European Central Bank from political pressure. She is due to speak to lawmakers in Berlin today. ECB President Mario Draghi yesterday signaled the central bank could do more to fight the crisis as long as governments push the euro area toward closer fiscal union.
“The greatest risk to our year-end forecast of $1.02 is that Europe again disappoints on policy action,” John Kyriakopoulos, Sydney-based head of currency strategy at National Australia Bank Ltd., wrote about the Australian currency in a research note today.
Investors are betting the slowing outlook for global growth will prompt the RBA to lower its benchmark rate by 25 basis points at its next meeting, a Credit Suisse Group AG index shows. The rate is currently 4.5 percent.
Higher rates in Australia and New Zealand, compared with as low as zero in the U.S. and Japan, attract investors to the South Pacific nations’ higher-yielding assets. The risk in such trades is that currency market moves will erase profits. New Zealand’s official cash rate is 2.5 percent.
Australia’s benchmark 10-year bond yield has risen 16 basis points, or 0.16 percentage point, this week to 4.02 percent. That’s the biggest advance since the five days ended Oct. 14.
New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, was unchanged at 2.88 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
