Aussie Hits 7-Week High Versus Kiwi as Job Data Diverge

Australia’s dollar touched a seven-week high against its New Zealand peer as gains in the nation’s employment exceeded estimates, while the jobless rate in the smaller country surged to the most in 13 years.

The so-called Aussie rose versus most major counterparts as investors reduced bets the Reserve Bank of Australia will cut borrowing costs next month. The New Zealand dollar, known as the kiwi, fell for a second day against the greenback after its biggest loss in three months. Demand for both currencies was limited as U.S. President Barack Obama faces budget negotiations with Congress.

Today’s data from Australia “was stronger than expected,” said Sue Trinh, a Hong Kong-based senior currency strategist at Royal Bank of Canada. “It’s no surprise to see the Aussie outperforming across the board. Expectations of a December rate cut from the RBA have been pared back further.”

The Australian dollar added 0.2 percent to NZ$1.2740 as of 4:42 p.m. in Sydney after it earlier touched NZ$1.2748, the strongest since Sept. 17. It was little changed at $1.0406. New Zealand’s currency lost 0.2 percent to 81.67 U.S. cents following a 1 percent decline as of the New York close, the biggest one-day drop since July 23.

The yield on Australia’s 10-year note dropped four basis points, or 0.04 percentage point, to 3.15 percent. New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, was at 2.64 percent from 2.62 percent yesterday.

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The number of people employed in Australia increased by 10,700 last month after rising a revised 15,500 in September, the statistics bureau said today. Economists in a Bloomberg News predicted a gain of 500. The unemployment rate was unchanged at 5.4 percent.

Interest-rate swaps data compiled by Bloomberg show traders see a 60 percent chance the RBA will cut the overnight cash rate target by a quarter-percentage point to 3 percent at a meeting on Dec. 4. The probability was 68 percent yesterday. RBA Governor Glenn Stevens and his board held borrowing costs at a gathering this week.

Statistics New Zealand said today the nation’s jobless rate increased to 7.3 percent in the three months ended September from 6.8 percent in the second quarter. That’s the most since 1999.

In the U.S., President Obama’s re-election is set to be followed by budget discussions with Congress to avert the so-called fiscal cliff, which refers to more than $600 billion in tax increases and spending cuts set to be implemented in 2013 that may push the U.S. back into recession.

“Everyone’s worried about the fiscal cliff,” said Sean Callow, a senior currency strategist in Sydney at Westpac Banking Corp. “I think we’re a long way from a deal. Risk appetite is under pressure.”

The Aussie has declined 2.7 percent in the past three months, the worst performance after the yen among the 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The kiwi fell 0.9 percent.