Aussie Slides Before Jobs as Japan Dumps Bonds, Toyota Pulls Out

Australia’s dollar weakened versus its major peers before data this week that may show unemployment rose and as Toyota Motor Corp. said it will stop making cars in the South Pacific nation.

Yields on Australia’s three-year government notes touched a one-month high last week as the Reserve Bank of Australia raised economic growth and inflation forecasts, damping speculation the RBA will cut borrowing costs. Japanese investors offloaded Australian sovereign bonds in December for the first time in seven months, capping a record 254.7 billion yen ($2.5 billion) of net sales last year, the Asian nation reported today. The Aussie rose against the yen in December for a fourth month.

“A lot of Japanese bond flows are very much related to the currency,” said Sally Auld, a Sydney-based interest-rate strategist at JPMorgan Chase & Co. “When Aussie weakens versus the yen, they like to get in, and when it strengthens they sell,” unless a solid trend in the currency develops, she said.

The Aussie fell 0.3 percent to 89.36 U.S. cents as of 5:38 p.m. in Sydney after strengthening 2.3 percent last week, the most since the period ended Sept. 6, to 89.59. It reached 89.99 on Feb. 7, the highest since Jan. 14. It slipped 0.2 percent to 91.50 yen and has averaged 92.68 since Sept. 30.

New Zealand’s kiwi dollar weakened 0.2 percent to 82.78 U.S. cents and 0.1 percent to 84.76 yen.

Australia’s three-year yields fell one basis point to 2.99 percent after rising to as high as 3.03 percent at the end of last week, a level unseen since Jan. 10. The 10-year rate touched 4.18 percent today, the most since Jan. 23.

Toyota Exits

Toyota, which started building cars in Australia in 1963, cited high manufacturing costs, an elevated local dollar and low economies of scale for the decision to shuit factories, according to an e-mailed statement. The company is the last carmaker to announce it is ending Australian production after Ford Motor Co. and General Motors Co. said last year they were shutting down output.

The statistics bureau will probably say Feb. 13 that the jobless rate climbed to 5.9 percent, a level last seen in June 2009, according to an analysts surveyed by Bloomberg. It also may say employment rose 15,000 in January, after unexpectedly dropping 22,600 in December, the first decrease in four months.

“If the jobs number is strong then maybe the market sells off a bit further in rates and the currency gets some support,” said Auld. “If we get a divergence between what commodity prices are doing and what the Aussie is doing, then that will start to worry the RBA again,” though gains amid stronger data may be acceptable, she said.

The Aussie has climbed 1.3 percent over the past week, paring to 12 percent its 12-month decline, according to Bloomberg Correlation Weighted Indexes that track 10 developed nation currencies.

Before it's here, it's on the Bloomberg Terminal.