Australia’s dollar slid versus its major peers after data showed the nation’s unemployment rate climbed to a three-year high, fanning speculation the Reserve Bank will lower borrowing costs to support growth.
The yield on Australia’s benchmark three-year note fell, snapping a two-day gain. The New Zealand dollar touched 86 U.S. cents for the first time in 1 1/2 years after reports showed the nation’s manufacturing industry expanded last month and a gauge of home prices advanced to a record.
“We’ll probably see weakness on the crosses for the next couple of days, as the view on a recovery in the Australian labor market remains challenged, and also the RBA retains its easing bias,” said Andrew Salter, a Sydney-based foreign- exchange strategist at Australia & New Zealand Banking Group Ltd. (ANZ), referring to Australia’s dollar against its peers.
The Australian dollar lost 0.2 percent to $1.0520 as of 4:57 p.m. in Sydney. The New Zealand dollar, known as the kiwi, rose 0.2 percent to 85.91. The climb to 86 was the first time for the currency since August 2011.
Australia’s three-year note yield fell two basis points, or 0.02 percentage point, to 2.81 percent. It slid to 2.75 percent on April 8, a level unseen since March 5.
The nation’s jobless rate rose to 5.6 percent last month, the highest since 2009, from 5.4 percent in February, the statistics bureau said in Sydney today. The number of people employed dropped by 36,100, compared with the 7,500 decline estimated by economists in a Bloomberg News survey.
Swaps traders see a 61 percent chance that the Reserve Bank of Australia will cut the benchmark rate from 3 percent by October, according to data compiled by Bloomberg on overnight- index swaps. The probability was 57 percent yesterday.
New Zealand’s Performance of Manufacturing Index was 53.4 in March, remaining above the 50 level which indicates expansion for a sixth month, Bank of New Zealand and Business New Zealand reported.
A gauge of the nation’s home prices rose 2.4 percent in March from the prior month to an all-time high, the Real Estate Institute of New Zealand said today.
“The current rate of house price inflation, if it continues, is likely to be accompanied by higher interest rates sooner, and higher exchange rates,” New Zealand Finance Minister Bill English said in a speech in Wellington.
The kiwi’s trade-weighted currency index climbed to 79.11 today, the highest on record dating back to 1985, figures from the nation’s central bank show.
The kiwi gained 0.4 percent to NZ$1.2249 per Australian dollar after touching NZ$1.2230, the strongest since Feb. 20.
“Domestic conditions in New Zealand have been relatively robust recently,” said Thomas Averill, a managing director in Sydney at Rochford Capital, a currency and interest-rate risk management company. “We can see the Aussie-kiwi back down towards NZ$1.21.”
Trading of the Australian dollar for China’s yuan totaled A$250 million ($263 million) on the first day of direct transactions between the two currencies yesterday, Australian Prime Minister Julia Gillard said in an interview today.
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