Bloomberg News

Aussie Dollar Gains as Jobless Rate Unexpectedly Drops

May 10, 2012

Australia’s dollar advanced versus all 16 of its major counterparts after the nation’s jobless rate unexpectedly dropped in April to the lowest in a year.

The so-called Aussie gained versus the dollar and yen as technical indicators signaled its declines this week may have been too rapid. It held an advance even after a report showed lower-than-estimated export and import growth in China, the South Pacific nation’s biggest export destination. New Zealand’s currency rose, halting an eight-day decline.

“It was quite a shock drop in terms of unemployment,” Callum Henderson, global head of currency research at Standard Chartered Plc in Singapore, said about Australia’s jobs data. “The Aussie may gain for the next few days, but today’s bounce is noise rather than the trend.”

The Australian dollar added 0.6 percent to $1.0115 as of 4:13 p.m. in Sydney after falling 1.4 percent in the past two days. It gained 0.7 percent to 80.60 yen. The Aussie’s relative strength index versus the greenback fell to 30.53 yesterday, nearing the 30 level that some traders see as a signal an asset may reverse direction. Against the yen, it had been at 25.10.

New Zealand’s currency rose 0.4 percent to 78.72 U.S. cents and advanced 0.5 percent to 62.74 yen.

The MSCI Asia Pacific Index of shares was little changed after slumping 1.3 percent yesterday.

Australia’s unemployment rate fell to 4.9 percent from 5.2 percent in March, the statistics bureau said today. That’s the lowest since April 2011 and compares with a median forecast for an advance to 5.3 percent in a Bloomberg News survey of economists.

No Trend Change

“The key surprise from today’s employment report was the surprisingly large drop in the unemployment rate,” Todd Elmer, head of Group-of-10 foreign-exchange strategy for Asia excluding Japan at Citigroup Inc. in Singapore, wrote in a research note today. “Still, we doubt that the reading will be sufficient to change the trend in AUD since domestic variables are very much second-tier drivers of AUD in relation to global factors.”

The Aussie has lost 2 percent this year, the worst performance after the yen among the 10 developed-nation currencies tracked by Bloomberg Correlation Weighted Indexes.

The currency trimmed an earlier advance after the release of Chinese trade data added to concern that a slowdown in the world’s second-biggest economy will damp the outlook for Australia’s commodity exports.

Chinese Trade

Overseas shipments rose 4.9 percent from a year earlier, China’s customs bureau said on its website today. That compared with the 8.5 percent median estimate in a Bloomberg poll. Import growth of 0.3 percent trailed forecasts for a 10.9 percent increase.

Australian bonds pared gains after an earlier rally pushed yields to all-time lows. The 10-year bond rate was at 3.32 percent after reaching a record 3.305 percent. The three-year yield was little changed at 2.66 percent after earlier touching 2.597 percent.

New Zealand’s currency declined yesterday to 78.14 U.S. cents, the weakest since Jan. 9. The nation’s two-year swap rate, a fixed payment made to receive floating rates, rose five basis points to 2.57 percent. It fell to an all-time low of 2.46 percent on May 7, below the central bank’s official cash rate of 2.50 percent.

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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