Aussie Dollar Rises, Snaps 3-Day Drop After Jobs Data

Australia’s dollar rose, snapping three days of declines, after a report showed unemployment in the nation decreased in August.

New Zealand’s currency and the so-called Aussie were buoyed on prospects European Central Bank President Mario Draghi will today announce unlimited, sterilized bond buying to quell the euro region’s debt crisis, supporting investor appetite for higher-yielding assets. Demand for the South Pacific currencies was tempered on concern global growth is slowing.

“It’s a knee-jerk reaction to the unemployment rate,” said Sean Callow, a senior currency strategist at Westpac Banking Corp. (WBC) in Sydney. “The market is taking this as a small positive.”

The Australian dollar gained 0.3 percent to $1.0227 at 5:01 p.m. in Sydney. It advanced 0.3 percent to 80.18 yen. New Zealand’s dollar strengthened 0.3 percent to 79.68 U.S. cents and 0.3 percent to 62.47 yen.

Australia’s unemployment rate fell to 5.1 percent in August from 5.2 percent in July, the government said today. The median estimate of 17 economists in a Bloomberg News survey was 5.3 percent.

The Aussie and New Zealand’s currency rose against most of their 16 major counterparts tracked by Bloomberg before the ECB’s Draghi speaks at a press conference today following the central bank’s interest rate decision.

Draghi’s Plan

Policy makers are deliberating whether to accept Draghi’s bond-buying proposal involving unlimited purchases of government debt that will be sterilized to assuage concerns about printing money. Sterilization involves draining money from other parts of the financial system to offset new funds added.

“If Draghi does announce such a plan, that is going to be positive for markets, that should give the Aussie a bit of a boost,” said Janu Chan, an economist at St. George Bank Ltd. in Sydney. “If they do cut interest rates as well, that would be another positive.”

The advances in the Aussie and kiwi may be tempered before reports that show the U.S. jobs market is slowing and Europe’s economic recovery is faltering.

A report tomorrow may show U.S. payrolls probably grew at a slower pace in August, according to economists surveyed by Bloomberg ahead of Labor Department figures Sept. 7.

The second estimate of euro zone gross domestic product growth in the second quarter is predicted to confirm the region’s economic contraction in the three months through June, economists in a Bloomberg survey said before a report due today.

Australia’s 10-year yield gained six basis points, or 0.06 percentage point, to 3.10 percent. New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, rose four basis points to 2.66 percent.

To contact the reporters on this story: Sharon Chen in Singapore at schen462@bloomberg.net; Benjamin Purvis in Sydney at bpurvis@bloomberg.net

To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net

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