The Australian dollar gained toward a record and government bond yields climbed as a government report showed employers added the most jobs in eight months, adding to pressure for the central bank to raise interest rates.
The so-called Aussie has jumped 8 percent in the past month versus the greenback as speculation intensified the Federal Reserve will join the Bank of Japan in expanding stimulus programs. That pushed the yield advantage offered by the South Pacific nation’s bonds to a two-year high against Treasuries. Australia’s currency rose against New Zealand’s for a second day as the employment data fueled bets the bigger nation’s central bank will raise borrowing costs next month.
“There’s still a lot of momentum in this economy,” said Tony Morriss, a senior markets strategist in Sydney at Australia & New Zealand Banking Group Ltd. “It’s very positive for the Aussie because interest-rate differentials already remain very supportive.”
Australia’s currency rose to 98.30 U.S. cents as of 4:03 p.m. in Sydney from 97.75 cents in New York yesterday. It climbed to as high as 98.46 U.S. cents. The Aussie gained to 81.45 yen from 81.07 yen. It was at NZ$1.3039 from NZ$1.2987.
The Australian dollar reached a record 98.50 U.S. cents in July 2008. It fell to 60.09 cents three months later as the collapse of Lehman Brothers Holdings Inc. froze credit markets and prompted investors to dump riskier assets.
New Zealand’s currency, nicknamed the kiwi, fetched 75.39 U.S. cents from 75.25 cents. It reached 75.49 cents yesterday, the strongest level since Oct. 26, 2009. The currency was at 62.49 yen from 62.40 yen.
RBA Rate Outlook
Australia’s employers added 49,500 workers and the unemployment rate held at 5.1 percent in September, the government reported today. Economists in a Bloomberg News survey had forecast jobs would rise by 20,000.
There is a 68 percent probability the Reserve Bank of Australia will raise borrowing costs on Nov. 2, according to swap indexes by Credit Suisse Group AG. The probability was 41 percent yesterday.
The Australian dollar jumped 15 percent last quarter, the most in more than a year, as central bank Governor Glenn Stevens signaled he may resume raising interest rates with the biggest mining boom in more than a century stoking the economy.
“If downside possibilities do not materialize, the task ahead is likely to be one of managing a fairly robust upswing,” Stevens told a forum in the regional city of Shepparton in Victoria state on Sept. 20. “Part of that task will, clearly, fall to monetary policy.”
Yield Advantage
The yield on Australia’s two-year note rose 16 basis points, or 0.16 percentage point, to 4.91 percent, the largest one-day advance since Feb. 24, according to data compiled by Bloomberg. That is 4.52 percentage points more than the rate on two-year Treasuries, the largest gap since June 2008.
Links with fast-growing markets helped Australia skirt a global recession after Lehman’s failure. Its economy expanded 1.2 percent in the second quarter of 2010, the quickest pace in three years, sending the jobless rate to almost half the level in the U.S.
Twenty percent of Australia’s economy depends on exports, led by iron ore and coal to countries including China, the island nation’s largest trading partner.
The Australian currency is the second-best performer this year among the 16 most-traded currencies against the greenback, trailing South Africa’s rand. The Aussie’s gains accelerated over the past month on speculation the Fed will act to revive the U.S. economy with bond purchases, so-called quantitative easing. Japan announced its own asset-purchase plan this week.
Fed Purchases
The Fed snapped up $300 billion of Treasuries last year. It purchased $2.069 billion of Treasuries maturing from March 2013 to June 2013 yesterday as part of a program to reinvest principal payments on its mortgage holdings into government debt to prevent money from being drained out of the financial system. The central bank has bought $44.071 billion of Treasuries since it began the program on Aug. 17.
Australia’s dollar has become a favorite for traders because of the country’s relatively high interest rates. The central bank has raised its benchmark borrowing rate to 4.5 percent from 3 percent over the past 12 months, as the Fed and the European Central Bank kept theirs unchanged at all-time lows. The Bank of Japan on Oct. 5 cut its rate to “virtually zero.”
Trader Favorite
The Aussie passed the Swiss franc to become the world’s fifth most-traded currency, according to the Bank for International Settlements’ Triennial Central Bank Survey released Sept. 1. It accounts for 7.6 percent of daily trading though Australia makes up 1.6 percent of world gross domestic product.
The New Zealand dollar was near an 11-month high against the U.S. currency as companies in the U.S. unexpectedly cut 39,000 jobs in September, figures from ADP Employment showed yesterday. A Labor Department report Oct. 8 may show the U.S. jobless rate probably rose to 9.7 percent in September from 9.6 percent in August, according to a Bloomberg News survey of 80 economists.
New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, climbed to 3.81 percent from 3.76 percent.
“Bearish U.S. dollar sentiment was reinforced by more talk the Fed will have to restart quantitative easing later this year to revive the flagging U.S. recovery,” John Kyriakopoulos, head of currency strategy at National Australia Bank Ltd. in Sydney, wrote in a research note. “The U.S. dollar continued to tumble, providing a default lift to most of the major currencies.”
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The so-called Aussie has jumped 8 percent in the past month versus the greenback as speculation intensified the Federal Reserve will join the Bank of Japan in expanding stimulus programs. That pushed the yield advantage offered by the South Pacific nation’s bonds to a two-year high against Treasuries. Australia’s currency rose against New Zealand’s for a second day as the employment data fueled bets the bigger nation’s central bank will raise borrowing costs next month.
“There’s still a lot of momentum in this economy,” said Tony Morriss, a senior markets strategist in Sydney at Australia & New Zealand Banking Group Ltd. “It’s very positive for the Aussie because interest-rate differentials already remain very supportive.”
Australia’s currency rose to 98.30 U.S. cents as of 4:03 p.m. in Sydney from 97.75 cents in New York yesterday. It climbed to as high as 98.46 U.S. cents. The Aussie gained to 81.45 yen from 81.07 yen. It was at NZ$1.3039 from NZ$1.2987.
The Australian dollar reached a record 98.50 U.S. cents in July 2008. It fell to 60.09 cents three months later as the collapse of Lehman Brothers Holdings Inc. froze credit markets and prompted investors to dump riskier assets.
New Zealand’s currency, nicknamed the kiwi, fetched 75.39 U.S. cents from 75.25 cents. It reached 75.49 cents yesterday, the strongest level since Oct. 26, 2009. The currency was at 62.49 yen from 62.40 yen.
RBA Rate Outlook
Australia’s employers added 49,500 workers and the unemployment rate held at 5.1 percent in September, the government reported today. Economists in a Bloomberg News survey had forecast jobs would rise by 20,000.
There is a 68 percent probability the Reserve Bank of Australia will raise borrowing costs on Nov. 2, according to swap indexes by Credit Suisse Group AG. The probability was 41 percent yesterday.
The Australian dollar jumped 15 percent last quarter, the most in more than a year, as central bank Governor Glenn Stevens signaled he may resume raising interest rates with the biggest mining boom in more than a century stoking the economy.
“If downside possibilities do not materialize, the task ahead is likely to be one of managing a fairly robust upswing,” Stevens told a forum in the regional city of Shepparton in Victoria state on Sept. 20. “Part of that task will, clearly, fall to monetary policy.”
Yield Advantage
The yield on Australia’s two-year note rose 16 basis points, or 0.16 percentage point, to 4.91 percent, the largest one-day advance since Feb. 24, according to data compiled by Bloomberg. That is 4.52 percentage points more than the rate on two-year Treasuries, the largest gap since June 2008.
Links with fast-growing markets helped Australia skirt a global recession after Lehman’s failure. Its economy expanded 1.2 percent in the second quarter of 2010, the quickest pace in three years, sending the jobless rate to almost half the level in the U.S.
Twenty percent of Australia’s economy depends on exports, led by iron ore and coal to countries including China, the island nation’s largest trading partner.
The Australian currency is the second-best performer this year among the 16 most-traded currencies against the greenback, trailing South Africa’s rand. The Aussie’s gains accelerated over the past month on speculation the Fed will act to revive the U.S. economy with bond purchases, so-called quantitative easing. Japan announced its own asset-purchase plan this week.
Fed Purchases
The Fed snapped up $300 billion of Treasuries last year. It purchased $2.069 billion of Treasuries maturing from March 2013 to June 2013 yesterday as part of a program to reinvest principal payments on its mortgage holdings into government debt to prevent money from being drained out of the financial system. The central bank has bought $44.071 billion of Treasuries since it began the program on Aug. 17.
Australia’s dollar has become a favorite for traders because of the country’s relatively high interest rates. The central bank has raised its benchmark borrowing rate to 4.5 percent from 3 percent over the past 12 months, as the Fed and the European Central Bank kept theirs unchanged at all-time lows. The Bank of Japan on Oct. 5 cut its rate to “virtually zero.”
Trader Favorite
The Aussie passed the Swiss franc to become the world’s fifth most-traded currency, according to the Bank for International Settlements’ Triennial Central Bank Survey released Sept. 1. It accounts for 7.6 percent of daily trading though Australia makes up 1.6 percent of world gross domestic product.
The New Zealand dollar was near an 11-month high against the U.S. currency as companies in the U.S. unexpectedly cut 39,000 jobs in September, figures from ADP Employment showed yesterday. A Labor Department report Oct. 8 may show the U.S. jobless rate probably rose to 9.7 percent in September from 9.6 percent in August, according to a Bloomberg News survey of 80 economists.
New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, climbed to 3.81 percent from 3.76 percent.
“Bearish U.S. dollar sentiment was reinforced by more talk the Fed will have to restart quantitative easing later this year to revive the flagging U.S. recovery,” John Kyriakopoulos, head of currency strategy at National Australia Bank Ltd. in Sydney, wrote in a research note. “The U.S. dollar continued to tumble, providing a default lift to most of the major currencies.”
http://jodnet.blogspot.com
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