Australia’s dollar touched the highest level in more than a week after a report showed more people found work last month than predicted.
The so-called Aussie climbed versus all of its major counterparts, even after the jobless rate rose to the highest level since 2010. Demand for the Australian currency and its New Zealand counterpart was tempered after Standard & Poor’s lowered Spain’s credit rating to one level above junk, adding to concern the euro area’s debt crisis is deepening. The New Zealand dollar remained lower versus the yen after a manufacturing gauge indicated a contraction last month.
“The fact that we still have jobs created, particularly in the full-time sector, should limit the fallout for the Aussie,” said Jonathan Cavenagh, a Singapore-based currency strategist at Westpac Banking Corp. “But given that the unemployment rate is trending higher, we’d still want to be selling into rallies in the currency.”
The Australian dollar rose 0.4 percent to $1.0277 as of 4:55 p.m. in Sydney, after earlier touching $1.0287, the strongest since Oct. 2. It climbed 0.2 percent to 80.18 yen.
The New Zealand dollar, known as the kiwi, bought 81.77 U.S. cents from 81.63 yesterday. It was little changed from yesterday at 63.79 yen, having fallen 1 percent over the past four days.
The yield on Australia’s 10-year note was at 3.03 percent after earlier declining as much as eight basis points, or 0.08 percentage point, to 3 percent. New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, was little changed at 2.625 percent.
The number of people employed in Australia rose by 14,500 in September, the statistics bureau said in Sydney today. That compares with the median estimate for an increase of 5,000 in a Bloomberg News survey of economists. The jobless rate rose to 5.4 percent, the highest since April 2010, from 5.1 percent as more people sought employment.
S&P announced in a statement yesterday its decision to cut Spain’s credit score two levels to BBB-. The ratings company assigned a negative outlook to the nation’s long-term rating and said there were “significant risks to Spain’s economic growth and budgetary performance.”
“We’re starting to see risk appetite come under pressure anyway this week and the downgrade from S&P simply reinforced that risk-off tone,” said Mike Jones, a currency strategist at Bank of New Zealand in Wellington. “Given that the speculators community is quite long on commodity currencies, this trend for a lower kiwi and Aussie on position trimming has got further to run.” A long position is a bet an asset will rise.
The difference in the number of wagers by hedge funds and other large speculators on a gain in the Australian dollar compared with those on a decline -- so-called net longs -- was 63,743 in the period ended Oct. 2, according to figures from the Washington-based Commodity Futures Trading Commission. That compares with 89,562 a week earlier, the most since April 2011. Net longs for New Zealand’s currency climbed to 21,381, the highest since February.
In New Zealand, a manufacturing gauge was at 48.2 in September, indicating contraction for a third-straight month, according to a report today. The index is compiled by Bank of New Zealand Ltd. and Business NZ.