Aussie Dollar Touches One-Month High on Jobs Growth Prospects

Australia’s dollar touched a one-month high on prospects a report this week will show jobs grew for a second month, enhancing local assets’ allure relative to the U.S., where labor data last week fell short of estimates.

The Aussie gained versus 14 of 16 major peers after a report showed home loans rose in November by more than economists forecast. The nation’s biggest banks are saying the currency will probably rally after its biggest annual loss versus New Zealand’s kiwi in 26 years as investors overstate the divergence in the two economies. Australia’s bonds advanced, sending the benchmark 10-year yield to the lowest since Nov. 27.

“The data coming out of Australia has been stable to good and that needs to continue with the unemployment number later this week for people to reassess their rates outlook,” said Derek Mumford, a director at Rochford Capital, foreign-exchange risk-management company in Sydney. “If the Aussie can consolidate above 89.50, there’s potential for a move higher.”

Australia’s dollar rose 0.4 percent to 90.30 U.S. cents as of 5:50 p.m. in Sydney, after reaching 90.42 cents, its strongest level since Dec. 12. It fell 0.3 percent to 93.43 yen.

New Zealand’s currency rose 0.4 percent to 83.34 U.S. cents and fell 0.3 percent to 86.22 yen.

Australia’s November home loans rose 1.1 percent, compared with the median forecast for a 1 percent advance in a Bloomberg News survey. The value of lending to owner-occupiers climbed 1.9 percent, the data showed today.

Jobs probably increased by 10,000 in Australia following November’s 21,000 gain, a separate survey predicted before the Jan. 16 report. U.S. employers added 74,000 jobs in December, the slowest pace since January 2011, compared with the Bloomberg median for 197,000 additions.

Short Squeeze

The Aussie may climb as high as 92.50 cents over the next week if traders are forced to exit positions betting on declines in the currency, said Rochford’s Mumford.

Futures traders cut bets on continued declines in the Australian dollar for the first time in six weeks over the period ended Jan. 7, according to Washington-based Commodity Futures Trading Commission data.

The difference in the number of wagers by hedge funds and other large speculators on a decline in the Aussie versus the dollar compared with those on a gain, or net shorts, stood at 56,852 from 57,414 in the previous period.

“Traders are questioning the possibility of further declines in the exchange rate over the near term, given that it appears the RBA may have reached the end of its easing cycle,” David de Ferranti, a Sydney-based market analyst at FXCM Inc., a currency broking group, wrote in an e-mailed note.

Australia’s 10-year bond yield fell four basis points to 4.23 percent after touching 4.20 percent.

To contact the reporter on this story: Candice Zachariahs in Sydney at czachariahs2@bloomberg.net

To contact the editor responsible for this story: Garfield Reynolds at greynolds1@bloomberg.net

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