Aussie Trades Near 3-Week High Before Jobs, Yellen

Australia’s dollar traded near the highest in almost three weeks before data forecast to show domestic job gains and after the White House said Federal Reserve Vice Chairman Janet Yellen will be nominated to head the U.S. central bank.

The Aussie gained versus most major counterparts on estimates a report tomorrow will show payrolls climbed last month by the most in five months, while the unemployment rate remained at a four-year high of 5.8 percent. The Australian and New Zealand currencies pared earlier advances amid a continued standoff among U.S. lawmakers that has kept the government partially shut.

“If it’s very clear in the jobs numbers that the increase is due to temporary workers during the election, the market will likely see a temporary rise in the Aussie,” said Emma Lawson, the Sydney-based senior currency strategist at National Australia Bank Ltd. “But with the unemployment rate expected to stay at 5.8 percent, I don’t think the impact on the currency will be very long lasting.”

The Australian dollar added 0.1 percent to 94.34 U.S. cents as of 4:41 p.m. in Sydney after earlier climbing as much as 0.3 percent. It touched 94.84 cents yesterday, the highest since Sept. 19. New Zealand’s kiwi currency bought 82.88 U.S. cents, little changed from yesterday, after rising as much as 0.4 percent.

Australia’s 10-year (GACGB10) bond yield touched 4.11 percent, the highest in more than three weeks. The yield on debt due in three years rose to as much as 3.06 percent, a level unseen since March. New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, was little changed at 3.47 percent.

Payrolls Gain

Australian employers probably added 15,000 jobs last month after cutting 10,800 in August, according to the median estimate of economists surveyed by Bloomberg News before the data. That would be biggest increase since April.

Consumer confidence weakened 2.1 percent this month after climbing 4.7 percent in September, according to a report today from Westpac Banking Corp. and the Melbourne Institute.

With mining detracting from growth, the Reserve Bank of Australia may need to hold down interest rates for an extended period, Sydney-based money managers Adam Bowe and Robert Mead wrote in an article today on the website of Pacific Investment Management Co., which runs the world’s biggest bond fund.

Interest-rate swaps data compiled by Bloomberg show traders see a 27 percent chance the RBA will cut its record-low 2.5 percent benchmark to 2.25 percent or less by year-end, and 40 percent odds for a reduction by May.

Yellen Relief

Obama will announce Yellen’s nomination at the White House, an official said in an e-mailed statement. Yellen has supported the central bank’s unprecedented bond-buying program, which has tended to debase the greenback.

“The expectation is that it would be Yellen,” NAB’s Lawson said. “There might be just a little bit of relief now that we know what’s going on.”

Obama said at a news conference yesterday he’s willing to talk to Republicans about anything, including changes to his health-care law, once lawmakers end the shutdown and increase the U.S. debt limit. U.S. House Speaker John Boehner insisted on immediate negotiations with the president.

The world’s biggest economy will exhaust its borrowing authority on Oct. 17 and will have about $30 billion in cash after that. San Francisco Fed President John Williams estimated on Oct. 3 a two-week shutdown would shave 0.25 percentage point off fourth-quarter growth.

“The Aussie is hostage to U.S. dollar developments,” said Besa Deda, the chief economist at St. George Bank Ltd. in Sydney. “Weaker U.S. growth means weaker world growth. That means safe-haven flows and higher risk aversion, which generally work against Aussie dollar strength.”

To contact the reporter on this story: Kristine Aquino in Singapore at kaquino1@bloomberg.net

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

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