The Australian and New Zealand dollars climbed against most of their major peers after reports in both nations showed the unemployment rate dropped.
New Zealand’s currency ended a three-day decline versus the greenback after employers added the most workers on record in the last quarter. The so-called kiwi recouped a loss from yesterday that was driven by Reserve Bank Governor Graeme Wheeler’s comment that the central bank sold the currency and can do so again to protect growth. Australia’s dollar rose against the yen as traders pared estimates for further cuts to the nation’s benchmark interest rate.
“There’s a lot of short positioning in the Australian dollar from the speculative community, so that does make the exchange rate susceptible to a squeeze,” said Andrew Salter, a Sydney-based currency strategist at Australia & New Zealand Banking Group Ltd., referring to reduction in bearish bets on the currency. “This employment data is a good catalyst.”
The Australian dollar jumped 0.7 percent to $1.0242 at 4:47 p.m. in Sydney. It gained 0.4 percent to 101.12 yen and was unchanged at NZ$1.2104. New Zealand’s currency advanced 0.7 percent to 84.63 U.S. cents, after yesterday’s 0.7 percent drop. It strengthened 0.4 percent to 83.55 yen.
Australia’s employers added 50,100 jobs in April, more than the median estimate of 11,000 positions in a Bloomberg News survey, a statistics bureau report showed today. The unemployment rate fell to 5.5 percent from 5.6 percent in the previous month.
Traders lowered bets on cuts to the benchmark rate in Australia over a year to 33 basis points from 41 yesterday, according to a Credit Suisse Group AG index based on overnight-index swaps. Reserve Bank of Australia Governor Glenn Stevens cut the rate to a record low 2.75 percent on May 7.
Stanley Druckenmiller, who made $1 billion for George Soros as his chief strategist by forcing a devaluation of the British pound in 1992, said investors should bet against the Aussie.
“We think the Australian dollar will come down and will come down hard,” Druckenmiller said yesterday at the Sohn Investment Conference in New York. “It’s expensive.”
The currency has dropped 2.5 percent over the past month, the worst performance among 10 developed-market currencies tracked by Bloomberg Correlation Weighted Indexes. The kiwi fell 0.7 percent.
Statistics New Zealand said today that employment surged 1.7 percent, or 38,000 jobs, from the fourth quarter. The median forecast in a separate Bloomberg survey was for a 0.8 percent gain. The jobless rate fell to 6.2 percent, lower than the 6.8 percent rate predicted by economists.
New Zealand’s currency rose as much as 0.6 percent against the Aussie after its jobs report before paring gains. The currency touched NZ$1.1958 per Australian dollar on May 7, the strongest since October 2009.
The Aussie-kiwi cross has “quite a bit of natural support around that NZ$1.1950 to NZ$1.20 area,” said Tim Kelleher, the head of institutional foreign-exchange sales at ASB Institutional, a unit of Commonwealth Bank of Australia in Auckland. “It would struggle to get down through there.”
Kelleher said he would look to sell the kiwi above 85 U.S. cents.
New Zealand’s two-year swap rate, a fixed payment made to receive floating rates which is sensitive to interest-rate expectations, rose to 2.84 percent from 2.80 yesterday.
Australia’s three-year bond yield rose six basis points, the most since March 25, to 2.57 percent. The 10-year rate climbed to 3.16 percent from 3.12 percent.