Bloomberg News

Aussie Dollar Advances, Snapping 2-Day Drop, Before Jobs Data

July 06, 2011

July 6 (Bloomberg) -- The Australian dollar rose, snapping two days of decline against the greenback, before a government report tomorrow that economists said will show the nation added the most jobs in three months.

New Zealand’s currency strengthened from a one-week low as crude oil climbed for a second day and Asian stocks advanced, boosting demand for higher-yielding assets. Gains in the so- called kiwi were limited after Auckland-based Fonterra Cooperative Group Ltd., the world’s largest dairy exporter, said milk powder prices fell to the least in six months.

“The Aussie seems pretty well supported at the moment and there’s certainly some upside based around the market’s appetite for risk,” said David Greene, a Sydney-based senior corporate currency dealer at Western Union Business Solutions, a global payment services network. “We may see a slight lift,” in Australia’s dollar if the jobs number meets forecasts, he said.

Australia’s dollar advanced to $1.0729 at 4:13 p.m. in Sydney from $1.0693 yesterday in New York. It fetched 86.77 yen from 86.69. New Zealand’s dollar rose to 82.91 U.S. cents from 82.51 yesterday, when it fell as low as 82.34, the least since June 29. The currency gained 0.3 percent to 67.06 yen.

Crude oil for August delivery climbed 0.8 percent to $97.69 a barrel in electronic trading on the New York Mercantile Exchange. The contract yesterday gained to $96.89, the highest settlement since June 14. The MSCI Asia Pacific Index of regional shares rose 0.6 percent today.

Australia Jobs Data

The Australian dollar gained against 14 of its 16 major counterparts. The number of people employed in Australia rose by 15,000 in June, the statistics bureau will say, according to the median economist estimate in a Bloomberg News survey.

Demand for the Aussie increased on prospects the South Pacific nation will maintain its yield advantage even after the Reserve Bank of Australia left its key interest rate unchanged at 4.75 percent yesterday for a seventh meeting.

The yield premium of 10-year Australian government debt over U.S. Treasuries widened to 2.1 percentage points yesterday, the most since June 24, and was at 2.07 percentage points today.

“The yield differential is clearly already attractive,” BNP Paribas SA analysts led by New York-based Ray Attrill wrote in a note to clients yesterday. “The market is not long, and as risk rebounds, there is likely still some upside.”

BNP Paribas forecasts the Australian dollar will rise to $1.09 by the end of September and to $1.13 by year-end.

Australia’s benchmark 10-year bond yield was little changed at 5.218 percent from 5.224 percent yesterday. New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, was little changed at 3.38 percent.

Milk powder for September delivery fell 7.4 percent from three weeks earlier, according to a trade-weighted price index calculated by Fonterra. The average price was $3,666 a metric ton, the lowest since the Jan. 5 auction.

--With Assistance from Monami Yui in Tokyo and Ron Harui in Singapore. Editor: Jonathan Annells

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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