Aussie Declines on Unexpected Jobs Drop; Kiwi Gains on Rate Bets
Australia’s dollar slid versus all its major counterparts after data showed the nation’s payrolls unexpectedly fell and unemployment climbed to a four-year high.
The Aussie declined for the first time in a week against the greenback, retreating from the strongest level in more than two months, as investors added to bets the Reserve Bank of Australia will cut interest rates this year. The New Zealand dollar climbed for a fifth day, reaching the highest in more than three weeks, after the nation’s central bank signaled it may raise its key rate from a record low earlier than previously expected.
“The unemployment rate would be key to determining whether the RBA does cut rates again, so today’s number reinforces our view that there will at least one more cut in the cycle,” said Ray Attrill, the global co-head of currency strategy at National Australia Bank Ltd. “The fall back in the Aussie is justified.”
Australia’s currency lost 0.9 percent to 92.46 U.S. cents as of 4:41 p.m. in Sydney, after earlier reaching 93.54 cents, the strongest since June 19. It dropped 1.4 percent to 91.88 yen. The Aussie sank to NZ$1.1371, the lowest since Aug. 21, before trading at NZ$1.1373, 1.5 percent below yesterday’s close.
New Zealand’s kiwi dollar touched 81.51 U.S. cents, the highest since Aug. 19, before trading at 81.33 cents for a 0.6 percent gain. It added 0.1 percent to 80.78 yen.
The number of people employed in Australia decreased by 10,800 last month, after a revised 11,400 decline in July, according to a statistics bureau report today. The median forecast in a Bloomberg News survey of economists was for a 10,000 gain. The jobless rate rose to 5.8 percent, the highest since June 2009.
Interest-rate swaps data compiled by Bloomberg show traders see a 40 percent chance the RBA will lower its benchmark rate from 2.5 percent by the end of the year. That compares with a 33 percent chance indicated yesterday. NAB’s Attrill expects a rate cut in November from the central bank, which next meets on Oct. 1.
Australian government bonds rose, with the yield on 10-year note falling 13 basis points, or 0.13 percentage point, to 4.04 percent from yesterday, when it touched 4.20 percent, the most since March 2012. The three-year rate declined 11 basis points to 2.87 percent.
The kiwi rose against all of its 16 major counterparts after the Reserve Bank of New Zealand forecast that bank bill rates will be higher than previously estimated in the first half of 2014, indicating the central bank may raise benchmark borrowing costs within that period.
“With the inflation pressures that have the potential to build up, given the capacity constraints in the economy, we will need to raise interest rates,” RBNZ Governor Graeme Wheeler said in Wellington today after leaving the official cash rate at 2.5 percent, a record low.
New Zealand’s two-year swap rate, a fixed payment made to receive a floating rate, rose two basis points to 3.52 percent, after touching 3.56 percent, the most since August 2011.
“The kiwi is rising because the RBNZ has brought forward timing for the first rate increase,” said Mike Jones, a currency strategist at Bank of New Zealand Ltd. in Wellington. “The statement has been taken as a bit more hawkish.”
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