Australian Dollar Nears One-Month High Before Jobs Report; Kiwi Declines
Sept. 8 (Bloomberg) -- Sean Callow, a senior foreign-exchange strategist in Sydney at Westpac Banking Corp., talks about the outlook for the Australian dollar, and how the country's election has affected the currency. The Australian dollar traded near its strongest in four weeks before a report tomorrow forecast to show employers added positions for a sixth month, increasing pressure on the central bank to resume raising interest rates. Callow talks with Mark Barton on Bloomberg Television's "Global Connection." (Source: Bloomberg)
Sept. 7 (Bloomberg) -- Warren Hogan, chief economist at Australia & New Zealand Banking Group Ltd., talks about the outlook for the Australian economy and Reserve Bank of Australia monetary policy. Australia’s central bank may keep its benchmark interest rate unchanged for a fourth month today to support the nation’s economy as concerns deepen that recoveries may be faltering in the U.S., Japan and Europe. Hogan also discusses the outlook for Australia's government. He speaks with Rishaad Salamat on Bloomberg Television. (Source: Bloomberg)
The Australian dollar rose toward its strongest in four weeks before a report tomorrow forecast to show employers added positions for a sixth month, increasing pressure on the central bank to resume raising interest rates.
New Zealand’s dollar fell against all 16 major counterparts as stocks slid on signs the global economy is slowing, damping demand for the nation’s higher-yielding assets. The Reserve Bank of Australia yesterday kept its key interest rate unchanged and said policy is “appropriate for the time being” amid uncertainty over the outlook for global growth.
“The employment data continues to surprise on the upside,” said Jonathan Cavenagh, currency strategist at Westpac Banking Corp. in Sydney. “The market is underestimating the chance of further tightening over the next 6 to 12 months, and that’s something that will support Aussie on any pullbacks.”
Australia’s dollar rose 0.5 percent to 91.49 U.S. cents as of 4:56 p.m. in Sydney from 91.06 cents in New York yesterday, after reaching 91.81 U.S. cents on Sept. 6, the highest level since Aug. 9. The so-called Aussie traded at 76.43 yen from 76.34 yen.
New Zealand’s dollar, nicknamed the kiwi, slipped 0.2 percent to 71.84 U.S. cents and fell 0.6 percent to 59.99 yen.
The number of people employed gained by 25,000 in August, a Bloomberg News survey of economists showed before the statistics bureau reports the data tomorrow. The jobless rate fell to 5.2 percent, economists predicted.
Home Loans
Demand for the Aussie dollar was also boosted as the number of loans granted to build or buy houses and apartments gained 1.7 percent in July, the statistics bureau said today. The median estimate of 20 economists surveyed by Bloomberg News was for a 1 percent increase in approvals.
“We anticipate an improvement in coming months with the RBA now on hold and with household incomes boosted by labor market strength,” said Bill Evans, chief economist at Westpac in Sydney.
Gains in the Australian dollar will be limited toward 92 U.S. cents, said Phil Burke, chief dealer for global foreign exchange and rates at JPMorgan Chase & Co. in Sydney.
The central bank kept Australia’s benchmark interest rate at 4.5 percent for a fourth month yesterday. The equivalent levels stand at 3 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. The risk in such trades is that currency market moves will erase profits.
New Zealand’s currency dropped for a second day against the yen before the Federal Reserve releases its Beige Book business survey that may add to evidence the U.S. recovery is stalling. The Fed will release its survey of conditions in its 12 districts today before officials meet to review monetary policy on Sept. 21.
The MSCI Asia Pacific Index fell 1 percent.
To contact the reporter on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net.
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