Bloomberg News

Aussie Weakens After Drop in June Payrolls; Kiwi Slides

July 12, 2012

Australia’s dollar weakened and bonds gained after a government report showed the nation’s employers unexpectedly cut payrolls in June.

New Zealand’s currency slid after data showed the country’s manufacturing industry expanded at a slower pace last month and as Asian stocks fell for a sixth day. Demand for the so-called Aussie and kiwi was limited before data tomorrow projected to show China’s economy grew at the slowest pace in three years during the second quarter, dimming the outlook for the South Pacific nations’ exports.

“The jobs numbers were much weaker than expected,” said Sue Trinh, a senior currency strategist in Hong Kong at Royal Bank of Canada. “That’s bearish for the Aussie dollar.”

Australia’s currency sank 0.8 percent to $1.0168 as of 4:04 p.m. in Sydney from the close in New York yesterday, when it gained 0.6 percent, the biggest advance since June 29. It declined 1.2 percent to 80.80 yen. The New Zealand dollar dropped 0.6 percent to 79.15 U.S. cents and fetched 63.89 yen, 1 percent weaker than the close yesterday.

Australia’s bonds advanced, with the benchmark 10-year yield falling 10 basis points, or 0.1 percentage point, to 2.89 percent. It touched 2.88 percent, the lowest level since June 5. The yield on the one-year note declined as much as 12 basis points and touched a record low of 2.313 percent.

The MSCI Asia Pacific Index (MXAP) of regional shares lost 1.5 percent.

The number of people employed in Australia fell by 27,000, the statistics bureau said in Sydney today. That compares with the median estimate of no change in employment in a Bloomberg News survey of 25 economists. The jobless rate rose to 5.2 percent from 5.1 percent.

N.Z. Manufacturing

The Performance of Manufacturing Index fell to 50.2 from a revised 55.8 in May, Bank of New Zealand Ltd. and Business New Zealand, a Wellington-based employer group, said today. A reading of more than 50 indicates manufacturing is expanding.

China’s economy probably expanded 7.7 percent in the second quarter from a year earlier, down from 8.1 percent in the prior three months, according to the median estimate in a Bloomberg survey of economists. That would be the slowest pace of growth since the first three months of 2009.

“China’s slowdown is bad for the commodity-related currencies,” said Junichi Ishikawa, an analyst in Tokyo at IG Markets Securities Ltd.

Australia’s dollar will finish the third quarter at 99 U.S. cents compared with an earlier projection of $1.01, and New Zealand’s currency will decline to 79 U.S. cents over the same period from an earlier forecast for 80 cents, Nomura Holdings Inc. said in a note yesterday.

The Aussie and kiwi rose yesterday as minutes of the Federal Reserve’s June meeting showed some policy makers thought more monetary stimulus may be needed to spur U.S. growth.

“People were looking for signs that QE3 is coming and people were slightly adding riskier currencies,” said John Curran, a senior vice president at CanadianForex Ltd., an online foreign-exchange dealer in Toronto, referring to bond purchases known as quantitative easing.

To contact the reporter on this story: Monami Yui in Tokyo at myui1@bloomberg.net

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


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