WSJ:Australian Dollar Down Late as Greenback Lifts on US Payrolls
By ENDA CURRAN
SYDNEY--Encouraging jobs data in the U.S. and expectations of more interest rate cuts by the Reserve Bank of Australia weighed on the Australian dollar through Asia trading, prompting some analysts to tip the unit to move toward parity against the U.S. dollar in coming weeks.
Data Friday showed a U.S. unemployment rate of 7.8% in September compared with 8.1% in August, its lowest since January 2009.
"Most of the time, good news for the U.S. economy is bad news for the U.S. dollar. Sometimes it's good news. Last week was very much the latter as good payrolls saw the Australian dollar drop to 3 month lows," said strategists at Westpac, who expect the Aussie to test parity before hitting a cushion on foreign demand for Australia's triple-A-rated debt.
At 0613 GMT the Australian dollar bought US$1.0164 from US$1.0263 late Friday. It was also trading at ¥79.832 from ¥80.37.
"The Australian Dollar has had a divergence away from the path of U.S. equity performance of late, with the currency still reeling from last week's RBA rate cut as well as the perception that there is another to come before year end," said CMC Markets trader Tim Waterer.
Mr. Waterer tips support at around US$1.0150 before rebounding to US$1.03 in the weeks ahead.
In the bond market, price action is being driven by expectations of the RBA further lowering its benchmark rate, after lowering it by 25 basis points to 3.25% last week.
"We have been bullish on rates, but think this pricing is now a stretch given the RBA is likely to be more reactive to the economic slowdown than proactive after 150 basis points of cuts over the past year," said Commonwealth Bank strategist Adam Donaldson.
Both the Aussie and bonds ignored a private sector survey showing a soft local jobs market.
The number of job advertisements in newspapers and online in September was 2.8% lower than in August in seasonally adjusted terms, and 10.8% lower than in September last year, the survey by Australia & New Zealand Banking Group showed. The decline in August from July was 2.4%.
Official employment figures are scheduled for release Thursday, Oct. 11.
