Australian Dollar Is Near 8-Week High Before Employment Report

Jan. 13 (Bloomberg) -- Australia’s dollar traded near an eight-week high before a government report tomorrow economists said will show employers added jobs for a fourth month.

The so-called Aussie gained against 12 of its 16 major counterparts before the report, which will show employers added 10,000 jobs last month, according to the median estimate of economists in a Bloomberg News survey.

“The fundamentals underpinning the strength of the Aussie dollar remain,” said Guthrie Williamson, a portfolio manager in Sydney at Principal Global Investors, which manages $200 billion in assets worldwide.

Australia’s dollar traded at 92.11 U.S. cents at 12:45 p.m. in Sydney from 92 cents yesterday in New York, when it fell 1 percent in the biggest slide since Dec. 17. The Aussie advanced 0.1 percent to 83.79 yen after dropping 2.2 percent yesterday.

New Zealand’s dollar was at 73.77 U.S. cents from 73.85 yesterday, when it declined 0.4 percent. The kiwi increased 0.1 percent to 67.25 yen from 67.19 yen.

Demand for both currencies was limited after China yesterday raised banks’ reserve requirements by 50 basis points starting Jan. 18, from 15.5 percent. The decision indicated increasing government concern a continuation of the record 9.21 trillion yuan ($1.3 trillion) of loans in the first 11 months of 2009 will create a bubble in property and stock prices.

“There are concerns over China’s reserve requirement hike,” said Adam Carr, a senior economist at ICAP Australia Ltd. in Sydney. “Modest in the grand scheme of things, but not insignificant for a jittery market as risk aversion takes hold.”

Potential Buyers

The Aussie may find buyers near 91.49 U.S. cents and 90.92 cents, wrote Matthew Strauss, a senior currency strategist in Toronto at Royal Bank of Canada, the nation’s biggest lender. It will struggle to rise past 93.25 cents, he wrote.

“The Australian dollar will likely continue to be at the mercy of global sentiment,” Strauss wrote. “The yen and to a lesser extent the U.S. dollar were back in favor as risk aversion returned.”

Australian government bonds advanced for a second day. The yield on 10-year notes fell 12 basis points, or 0.12 percentage point, to 5.51 percent, according to data compiled by Bloomberg.

Holders of Aussie bonds of all maturities have incurred a loss of 2.7 percent last year, according to Bank of America Merrill Lynch indexes, the worst performance since 1994.

New Zealand’s two-year swap rate, a fixed payment made to receive floating rates which is sensitive to rate expectations, was at 4.5525 percent, from 4.5400 percent yesterday.