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Aussie 10-Year Yield Touches 17-Month High Before U.S. Jobs Data

Sept. 6 (Bloomberg) -- Australian bonds fell, pushing the benchmark 10-year yield to its highest in 17 months, before a U.S. Labor Department report that may show jobs growth accelerated last month in the world’s largest economy.

The sovereign debt of Australia and New Zealand is part of a global sell-off in bonds on prospects the U.S. report will add to the case for the Federal Reserve to reduce stimulus. The Aussie and kiwi dollars are set to advance this week on data showing China’s manufacturing expanded and the euro-area economy returned to growth. The Aussie’s share of global currency turnover rose one percentage point to about 8.5 percent, the central bank said today, citing a survey by the Bank for International Settlements.

“The U.S. growth story is very important as is the better economic data coming out of Europe, because if you get a recovery in global demand, that benefits Australian exports,” said Philip Brown, a fixed-income strategist in Melbourne at Commonwealth Bank of Australia, the nation’s largest bank. “There is scope for the bond market to keep selling off, though it should slow a bit.”

Australia’s 10-year bond yield rose as much as nine basis points to 4.157 percent, the most since April 2012, and was at 4.14 percent at 4:40 p.m. in Sydney. It has climbed 25 basis points since Aug. 30. The three-year rate touched 2.986 percent, the highest since June 24. A basis point is 0.01 percentage point.

Weekly Gains

The Aussie rose 0.3 percent to 91.46 U.S. cents from yesterday, and is up 2.8 percent this week. It fell 0.3 percent to 91.09 yen, paring its weekly advance to 4.3 percent, the most since the period ended December 2011.

New Zealand’s kiwi rose 0.7 percent to 79.40 U.S. cents, the most since Aug. 21. It gained 2.7 percent since Aug. 30, ending a two-week slide. The currency weakened 0.2 to 79.10 yen today and traded 4.3 percent higher from the end of last week.

The U.S. Labor Department is forecast to say today that payrolls rose by 180,000 in August, from 162,000 the previous month, while the jobless rate held at 7.4 percent, according to the median estimate in a Bloomberg News poll.

A Bloomberg survey of economists last month showed that 65 percent expected that the Fed will start unwinding its $85 billion a month bond-buying program at this month’s meeting.

An official Purchasing Managers’ Index measuring Chinese manufacturing jumped more than estimated to a 16-month high of 51.0, a government report on Sept. 1. Europe’s gross domestic product rose 0.3 percent in the second quarter, figures showed on Sept. 4, ending a record-long recession.

China is scheduled to report August trade figures on Sept. 8 with economists predicting annual import growth accelerated to 11.2 percent from 10.9 percent in the previous month, while exports grew 5.5 percent from 5.1 percent, according to the Bloomberg survey median.

“Risk will also be in for a busy start to next week with a data dump from China set to hit the wires and likely to move risk currencies like the Australian dollar which has outperformed this week,” Stan Shamu, a strategist at IG Ltd., wrote in a note to clients.

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

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

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