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Aussie Weakens as Jobs Growth Less Than Forecast; Kiwi Declines

Oct. 10 (Bloomberg) -- Australia’s dollar weakened as employers in the nation added fewer jobs than economists forecast last month, offsetting the impact of a lower-than-expected unemployment rate.

The Aussie and New Zealand’s kiwi dollar led declines against the greenback as U.S. Congressional leaders were said to be open to a short-term increase in the nation’s debt limit. Australia’s currency headed for its biggest drop this month after the statistics bureau said the labor participation rate declined to an almost seven-year low.

“Full-time jobs growth is only moderate at best and the participation rate declined,” said Jonathan Cavenagh, a currency strategist at Westpac Banking Corp. in Singapore. “That tempers my bullishness on the Aussie.”

The Australian dollar lost 0.4 percent to 94.10 U.S. cents at 5:01 p.m. in Sydney after earlier rising as much as 0.3 percent. New Zealand’s kiwi dollar declined 0.7 percent to 82.48 U.S. cents.

Australia’s three-year bond yield reached 3.13 percent, the most since March. The 10-year yield rose seven basis points to 4.16 percent, the highest close since Sept. 11.

Australian employers added 9,100 jobs in September, government figures showed today, fewer than the 15,000 gain estimated by economists surveyed by Bloomberg News. The participation rate fell to 64.9 percent from 65 percent the previous month, the least since November 2006.

Jobless Rate

The unemployment rate dropped to 5.6 percent last month from a four-year high of 5.8 percent in August, according to the report. Analysts had forecast the figure would be unchanged.

“We view this report as mixed but we do not believe it signals an improvement in the labor market,” Nomura Holdings Inc. strategists Charles St-Arnaud and Martin Whetton wrote in an e-mailed note to clients today. “Nevertheless, today’s report dramatically reduces the likelihood of an imminent rate cut and we now believe that the Reserve Bank of Australia will remain on hold at the November meeting.”

Interest-rate swaps data compiled by Bloomberg show traders see an 88 percent chance policy makers will keep the benchmark rate at a record-low 2.5 percent at their next gathering on Nov. 5, up from 75 percent odds a week earlier. There’s a 78 percent probability the rate will remain unchanged by the end of the year, according to the figures.

The U.S. currency rose against 12 of its 16 major peers. House Republican and Senate Democratic leaders are open to a short-term increase in the debt limit, said congressional aides of both parties who spoke on condition of anonymity. The movement comes after House Democrats met with President Barack Obama at the White House. A small group of House Republicans are scheduled to meet with the president today.

In New Zealand, a manufacturing gauge by the Bank of New Zealand Ltd. and Business NZ fell to 54.3 in September from 57.1 in the previous month, according to a report today.

The nation’s two-year swap rate, a fixed payment made to receive floating rates, gained five basis points to 3.52 percent, the highest close since Sept. 17.

To contact the reporter on this story: Kristine Aquino in Singapore at kaquino1@bloomberg.net

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

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