The Australian dollar slid versus most of its 16 major peers before a report this week that may show an increase in unemployment, adding to signs of weakness in the domestic economy.
Australia’s currency fell against the dollar on prospects employers in the South Pacific nation last month added the fewest jobs since a decline in August. Both the so-called Aussie and its New Zealand counterpart, known as the kiwi, tumbled from the highest levels in more than four years versus the yen after comments by Japan’s economy minister stoked speculation the country won’t try to spur further losses in its currency.
“There is underlying weakness in the labor market,” said Andrew Salter, a currency strategist in Sydney at Australia & New Zealand Banking Group Ltd. (ANZ) “If we do a get a weaker unemployment read, the market will look to take the Aussie lower.”
The Australian dollar fell 0.2 percent to $1.0549 as of 4:45 p.m. in Sydney after rising 0.3 percent yesterday. It touched 94.66 yen, the highest since August 2008, before trading at 93.83, 0.8 percent below the close in New York. New Zealand’s currency, known as the kiwi, lost 0.3 percent to 84.05 U.S. cents. It slid 0.9 percent to 74.75 yen after earlier reaching 75.53, the strongest since September 2008.
Australia’s jobless rate probably rose to 5.4 percent last month from 5.2 percent in November, according to the median estimate in a Bloomberg News survey before the statistics bureau releases the figures on Jan. 17. That would match the level reached in September that was the highest since 2010.
Interest-rate swaps data compiled by Bloomberg show traders see a 45 percent chance RBA Governor Glenn Stevens will keep borrowing costs unchanged at 3 percent by the bank’s March 5 rate decision. That’s up from 27 percent odds a month ago. There’s an 84 percent probability the cash rate will fall to a record 2.75 percent or lower by the July 2 meeting, according to the figures.
The Australian dollar’s 14-day relative strength index against the greenback was at 61 yesterday, near the 70 level that some traders see as a sign an asset has risen too quickly and may be set to reverse course.
“As the Aussie is approaching the $1.06 level, you might anticipate the currency to find some resistance,” said Greg Gibbs, a Singapore-based senior currency strategist at Royal Bank of Scotland Group Plc. The Aussie climbed to as high as $1.0599 on Jan. 11, matching the strongest level since Sept. 14.
The kiwi earlier climbed versus the yen after a report by the New Zealand Institute of Economic Research Inc. showed today that a net 20 percent of 767 companies surveyed last quarter said they expect the economy to improve in the next six months, the most since the three months through September 2011.
Australia’s 10-year bond yield was at 3.44 percent from 3.46 percent yesterday. New Zealand’s two-year swap rate, a fixed payment made to receive floating rates which is sensitive to interest-rate expectations, was unchanged at 2.82 percent.
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