Australian, N.Z. Dollars Strengthen on Job Gains, Central Bank

Dec. 10 (Bloomberg) -- The Australian dollar gained for a second day after a report showed employers last month added more than six times the number of jobs forecast by economists. New Zealand’s currency rose on prospects for higher interest rates.

The so-called Aussie advanced the most in a week after the statistics bureau said employers increased jobs for the third month in November, unexpectedly pushing down the unemployment rate to 5.7 percent. The New Zealand dollar climbed for a second day after the central bank said it will raise the benchmark interest rate sooner than it previously indicated as a stronger housing market leads the economy out of recession.

“Quite clearly unemployment has peaked at 5.8 percent and we think this is further testament to the momentum in the Australian economy and validates the RBA’s tightening cycle,” said Patrick Bennett, a foreign-exchange strategist at Societe Generale SA in Hong Kong. “The RBA will continue their steady process of taking this accommodation back at a gradual pace -- we are still at accommodative settings of monetary policy.”

Australia’s currency climbed 0.9 percent, the most since Dec. 1, to 91.65 U.S. cents as of 12:20 p.m. in Sydney from 90.86 in New York yesterday. It rose 1.4 percent to 80.96 yen.

New Zealand’s dollar gained to 72.47 U.S. cents from 71.89 cents yesterday, when it jumped 1.7 percent. The currency advanced 1.4 percent to 64.01 yen. The kiwi touched NZ$1.2579 against the Australian dollar, the strongest since Nov. 20, before trading at NZ$1.2648, from NZ$1.2639 yesterday.

Australian Jobs

The number of people employed in Australia rose 31,200 from October, the statistics bureau said in Sydney. The median estimate of economists surveyed by Bloomberg was for an increase of 5,000.

The Australian dollar may end the year at 92.50 U.S. cents while New Zealand’s currency may climb to 73 cents, Bennett said.

“If the economy continues to recover, conditions may support beginning to remove monetary stimulus around the middle of 2010,” New Zealand central bank Governor Alan Bollard said in a statement in Wellington today, after leaving the official cash rate at 2.5 percent.

New Zealand’s economy will expand 1.9 percent in the first quarter of 2010 from a year earlier, the bank said in new forecasts published today. That’s better than the 1.3 percent pace predicted in September. Annual growth will accelerate to 4.2 percent by the first quarter of 2011, the bank said. Annual consumer price inflation is expected to remain below 2 percent till early 2011, it said.

‘Tightening Cycle’

“New Zealand as well as the global environment have continued to rebound and that’s necessitated a shift in the timing of the tightening cycle,” said Imre Speizer, a market strategist in Wellington at Westpac Banking Corp. “The statement was quite a bit more hawkish than expected.”

Benchmark interest rates are 3.75 percent in Australia and 2.5 percent in New Zealand, compared with 0.1 percent in Japan and as low as zero in the U.S., attracting investors to the South Pacific nations’ higher-yielding assets. The risk in such trades is that currency market moves will erase profits.

New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, rose to 4.59 percent from 4.54 yesterday.

Australian government bonds fell a second day. The yield on 10-year notes rose seven basis points, or 0.07 percentage point, to 5.52 percent, according to data compiled by Bloomberg. The price of the 5.25 percent security due March 2019 fell 0.504, or A$5.04 per A$1,000 face amount, to 89.056.