June 11 (Bloomberg) -- The Australian dollar rose for a third day after a government report showed the nation lost fewer jobs in May than economists forecast. New Zealand’s currency gained after its central bank left interest rates on hold. New Zealand’s dollar gained the most in almost two weeks after Reserve Bank Governor Alan Bollard said the economy would start to recover toward the end of the year and traders added to bets interest rates will rise in the next 12 months. The Australia and New Zealand dollars also advanced after China said spending on factories, property and roads surged, fueling speculation demand for commodities will increase. “There’s a lot of positive sentiment out there,” said Jason Wong, who overseas $2.9 billion as head of investment strategy at AMP Capital Investors NZ Ltd. in Wellington. “The increased risk appetite, the signs of global economic recovery and investors want to get exposure via commodity currencies like the Aussie and kiwi.” Australia’s currency rose 0.9 percent to 81.05 U.S. cents as of 3:18 p.m. in Sydney from 80.31 cents yesterday. The currency advanced 0.7 percent to 79.31 yen after touching 79.61 yen, the highest level since Oct. 6. New Zealand’s dollar climbed 1.8 percent, the most since May 29, to 63.71 U.S. cents, and strengthened 1.4 percent to 62.32 yen. The number of people employed in Australia fell 1,700 from April, the statistics bureau said in Sydney. The median estimate of analysts surveyed by Bloomberg News was for a 30,000 decline. ‘Relief Rally’ “The Aussie is seeing a bit of a relief rally,” said David Forrester, a currency economist at Barclays Capital in Singapore. “You need a stronger global macro picture from here to push the currency higher, which we do see developing over the coming six months, but it isn’t quite there yet. So, we prefer to buy the currency on dips.” Investors should look to buy the Australian dollar at the high 70-U.S. cent level, he said. Demand for New Zealand’s dollar rose as the central bank left the cash rate at 2.5 percent after having cut borrowing costs 5.75 percentage points since last July to help kick-start the economy. “We expect the New Zealand economy to begin growing again toward the end of this year, but the recovery is likely to be slow and fragile,” Bollard said in Wellington. Traders are betting the central bank will increase interest rates by 66 basis points over the next 12 months, from an expectation of 54 points yesterday, a Credit Suisse index based on swaps trading showed. ‘Currency Rebound’ “The disappointment that the Reserve Bank of New Zealand didn’t cut has seen the currency rebound,” said Danica Hampton, a foreign-exchange strategist in Wellington at Bank of New Zealand Ltd., the nation’s third-biggest bank. “Bounces towards 63.50 U.S. cents will probably find sellers.” Bollard said the New Zealand dollar’s surge over the past three months created “unhelpful tension” with the central bank’s projections and put at risk the nation’s recovery from its worst recession in more than three decades. “We expect to keep the cash rate at or below the current level through until the latter part of 2010,” he said. The higher currency created a “premature tightening in financial conditions and may stifle a recovery.” Benchmark interest rates are 3 percent in Australia and 2.5 percent in New Zealand, compared with 0.1 percent in Japan and as low as zero in the U.S., attracting investors to the South Pacific nations’ higher-yielding assets. Quarterly Gains New Zealand’s dollar is the third best performer of the 16 major currencies over the past three months, rising 24.1 percent against the greenback. Australia’s dollar is second, having gained 24.3 percent. The best performer is South Africa’s rand. China’s urban fixed-asset investment climbed 32.9 percent in the five months to the end of May from a year earlier, the statistics bureau said in Beijing. Spending rose as the government’s 4 trillion yuan ($585 billion) stimulus package countered a record slump in exports. Australian government bonds advanced. The yield on 10-year notes fell one basis point, or 0.01 percentage point, to 5.61 percent, according to data compiled by Bloomberg. The price of the 5.25 percent security due March 2019 rose 0.052, or A$0.52 per A$1,000 face amount, to 97.292. New Zealand’s two-year swap rate climbed to 3.87 percent, the most since April, from 3.61 percent yesterday.

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