Aussie Rises on Jobs Gains, Pares Advance on Bernanke
Australia’s dollar erased declines against most major peers after a government report showed an unexpected jump in employment.
The Aussie touched parity with the U.S. dollar as traders trimmed bets the Reserve Bank of Australia will reduce borrowing costs further after an interest-rate cut this week. The currency dropped back below the greenback after Federal Reserve Chairman Ben S. Bernanke refrained from signaling additional steps the central bank might take to spur growth during congressional testimony.
New Zealand’s dollar, known as the kiwi, remained higher after gaining yesterday by the most this year amid speculation that Bernanke would identify the need for further stimulus.
Australia’s jobs report was “quite a bullish outcome,” said Jonathan Cavenagh, a currency strategist in Singapore at Westpac Banking Corp. (WBC) “The risks are you see the market probably price out further RBA rate cuts from here, so naturally the Aussie dollar can probably find a little bit more support.”
Australia’s currency climbed 0.1 percent to 99.36 U.S. cents as of 10:58 a.m. in New York after touching $1.003 and falling as much as 0.5 percent. It advanced 0.6 percent to 79.09 yen.
The kiwi added 0.1 percent to 77.13 U.S. cents and 0.6 percent to 61.39 yen. Both South Pacific nations’ currencies surged 1.9 percent against the greenback yesterday, the most since Nov. 30.
Equity Advance
The MSCI Asia Pacific Index (MXAP) of shares advanced 1.4 percent, bolstering investor appetite for riskier assets.
Australian payrolls jumped by 38,900 in May, the statistics bureau said today, while economists surveyed by Bloomberg News forecast no change. The jobless rate rose to 5.1 percent from a revised 5 percent in April as participation increased.
The data followed an official report yesterday that showed the nation’s gross domestic product expanded 1.3 percent in the first three months of this year from the fourth quarter, twice the pace economists estimated.
Traders bet the RBA will cut interest rates by 93 basis points in the next 12 months, down from 156 basis points of easing signaled on June 4, according to a gauge compiled by Credit Suisse Group AG based on overnight-index swap rates.
Australian bonds fell, pushing the yield on 10-year securities up by seven basis points, or 0.07 percentage point, to 3.07 percent.
The central bank reduced its benchmark rate by 25 basis points to 3.5 percent on June 5, following a cut of 50 basis points in May.
To contact the reporter on this story: Masaki Kondo in Singapore at mkondo3@bloomberg.net
To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net
June 7 (Bloomberg) -- Justin Smirk, senior economist at Westpac Banking Corp., talks about the Australian economy, the local currency, and central bank monetary policy. Australian employers unexpectedly added workers in May, the third straight monthly increase, as the nation’s resource-driven economy spurs hiring. The local dollar headed for its longest streak of gains since February. Smirk speaks from Sydney with Rishaad Salamat on Bloomberg Television's "On the Move Asia." (Source: Bloomberg)
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