The Australian dollar rallied to a one-week high after data showed that employers added almost seven times the number of workers in March than forecast, easing prospects the Reserve Bank will cut interest rates.
Australia’s bonds fell as Asian stocks rose, pushing all government yields below their three-month averages. New Zealand’s dollar gained against most major peers after a report showed the nation’s manufacturing industry expanded in March. Demand for both South Pacific currencies was also supported after Federal Reserve Vice Chairman Janet Yellen backed the case for more U.S. easing, and commodities prices climbed.
“It’s quite a strong report at face value,” Annette Beacher, the Singapore-based head of Asia-Pacific research at TD Securities Inc. said of the Australian jobs report. “There were some expectations that the RBA would need to cut rates by 50 basis points, but this report reminds you that the economy is not falling apart. The Aussie is well supported.”
Australia’s dollar earlier touched $1.0386, the strongest since April 3, before trading at $1.0378 as of 3:49 p.m. in Sydney, 0.8 percent higher than yesterday’s close in New York. The Aussie advanced 0.9 percent to 84.01 yen.
The nation’s government bonds declined, pushing the yield on the 10-year security up by as much as three basis points, or 0.03 percentage point, to 3.92 percent. Three-year yields rose eight basis points to 3.33 percent.
New Zealand’s currency added 0.3 percent to 82.02 U.S. cents from yesterday when it climbed 0.4 percent. The so-called kiwi rose 0.4 percent to 66.41 yen.
Australian payrolls rose by 44,000, the statistics bureau said in Sydney today. That compares with the median estimate for an increase of 6,500 in a Bloomberg News survey of 24 economists. The jobless rate held at 5.2 percent, compared with projections for a rise to 5.3 percent.
The Reserve Bank of Australia on April 3 held its benchmark interest rates unchanged at 4.25 percent. A Credit Suisse Group AG index based on swaps indicates the RBA will lower rates by 87 basis points, or 0.89 percentage point, over the next 12 months, compared to 94 basis points indicated yesterday.
Yellen endorsed the U.S. central bank’s “highly accommodative” policy, saying the Fed probably won’t achieve its goal of full employment for years. The central bank bought $2.3 trillion of securities in two rounds of so-called quantitative easing from December 2008 to June 2011 to support the economy, and it has pledged to keep interest rates low through late 2014.
“Fed members speaking are dovish members, and they will provide some stimulative type of language,” said Imre Speizer, a strategist in Auckland at Westpac Banking Corp. (WBC), Australia’s second-largest lender. “Right now, QE3 doesn’t seem to be on the table, but it’s certainly possible. I see some upside for the next day or two” in Aussie and kiwi.
Bank of New Zealand Ltd. and Business New Zealand said today their Performance of Manufacturing Index was at 54.5 in March from 57.7 in February. A reading of more than 50 indicates that manufacturing is expanding.
The MSCI Asia Pacific Index (MXAP) of stocks rose 0.6 percent following a 0.6 percent gain in the MSCI’s World Index yesterday. The Thomson Reuters/Jefferies CRB Index (CRY) of raw materials added 0.6 percent yesterday.
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