Australian Dollar Pares Losses After July Employment Report

By Ron Harui

Aug. 7 (Bloomberg) -- The Australian dollar pared losses after a government report showed employers hired double the number of extra workers in July than estimated by economists.

Australia's currency still headed for an eighth day of declines, the longest stretch since January 1995, on speculation the Reserve Bank of Australia will cut interest rates. Governor Glenn Stevens said Aug. 5, after keeping borrowing costs on hold, that there was increasing ``scope to move toward a less restrictive stance of monetary policy'' as the economy slowed.

``The headline is much better than expected, but I would say that most people will relegate this piece of data as a lagging indicator,'' said Sue Trinh, a senior currency strategist at RBC Capital Markets in Sydney. ``In terms of RBA policy, the implications are that we are still looking at an easing cycle beginning sooner rather than later. I'd say the Aussie's rally will likely fade throughout the day.''

The currency traded at 91.16 U.S. cents as of 12:13 p.m. in Sydney from 90.88 cents immediately before the report was released and 91.55 cents late in Asia yesterday. It reached 90.65 cents, the weakest since April 2.

The number of people employed rose 10,900 last month, the statistics bureau said in Sydney today, following a 22,200 gain in June. The median estimate of 24 economists surveyed by Bloomberg News was for a 5,000 increase.

The RBA will lower its benchmark rate by 0.85 percentage point over the next 12 months, according to a Credit Suisse Group index based on overnight swaps trading. The bank will definitely cut rates by 0.25 percentage point at its next meeting in September another Credit Suisse index showed. The RBA usually adjusts the target rate in 0.25 percentage point increments.

Australian two-year government bonds were little changed after the report, holding the yield at 5.99 percent. The price of the 5.25 percent security due August 2010 was at 98.623.

To contact the reporter on this story: Ron Harui in Singapore at rharui@bloomberg.net;