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The Australian and New Zealand dollars climbed after Asian stocks extended a global rally amid signals central banks will take steps to contain Europe’s debt crisis and flagging U.S. employment growth.
The so-called Aussie extended gains after touching the highest level this month against the yen and dollar after U.S. payrolls rose less than projected in August, spurring speculation continued weakness will encourage the Federal Reserve to add stimulus. The South Pacific currencies rose against most major peers after commodity prices yesterday climbed for the first day this week.
“The Australian dollar is going to be well supported today,” said Andrew Salter, a strategist in Sydney at Australia & New Zealand Banking Group Ltd. “The decision by the ECB to engage in some form of asset-purchase program is going to underpin risk sentiment. That’s going to benefit the Australian dollar.”
The Aussie rose 1 percent to $1.0392 as of 1:30 p.m. in New York, after touching the strongest level since Aug. 29. The currency advanced 0.2 percent to 81.24 yen and reached 81.63, the most since Aug. 29. The New Zealand dollar, known as the kiwi, added 1.3 percent to 81.18 U.S. cents following yesterday’s 0.9 percent advance.
The Australian dollar has climbed 0.7 percent since Aug. 31, snapping three weeks of declines. The New Zealand dollar strengthened 1 percent over the past week.
Australian government bonds fell, pushing the yield on 10- year government debt to its highest level since Aug. 29. The rate advanced 10 basis points to 3.20 percent. The advance in rates was the biggest since Aug. 16.
The MSCI Asia Pacific Index (MXAP) of stocks climbed 2.7 percent. That followed gains yesterday of 1.9 percent in MSCI’s World Index and 0.2 percent for the Thomson Reuters/Jefferies CRB Index of raw materials, its first advance since Aug. 31.
The Aussie and kiwi rose yesterday after European Central Bank President Mario Draghi announced an unlimited bond-purchase program to regain control of interest rates in the euro area and fight speculation of a currency breakup.
The program “will enable us to address severe distortions in government bond markets which originate from, in particular, unfounded fears on the part of investors of the reversibility of the euro,” Draghi said at a press conference in Frankfurt after the ECB held its benchmark rate at a record low of 0.75 percent.
The U.S. economy added 96,000 workers after a revised 141,000 increase in July that was smaller than initially estimated, Labor Department figures showed today in Washington. The median estimate of 92 economists surveyed by Bloomberg called for a gain of 130,000. The jobless rate fell to 8.1 percent.
Concern about jobs growth may prompt the U.S. central bank to implement a third round of asset purchases, or quantitative easing, in a bid to stimulate the economy. Such measures tend to debase the U.S. currency relative. The Fed’s policy committee next meets Sept. 12-13.
A private report today indicated that Australia’s building industry shrank in August at the fastest pace in 11 months, led by a slump in apartments and weaker engineering construction as demand from the resources industry wanes. The construction performance index fell to 32.2 last month from 32.6 in July, a survey by the Australian Industry Group and the Housing Industry Association released showed.
Australia recorded a wider-than-estimated trade deficit in July as weaker exports of gold and iron ore outpaced a decline in imports of industrial equipment. The shortfall was A$556 million ($574 million), from a revised A$227 million deficit in June, the Bureau of Statistics said today. The median estimate in a Bloomberg survey of 21 economists was for a deficit of A$300 million.
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