By Patricia Lui
Jan. 12 (Bloomberg) -- The Australian and New Zealand dollars fell after an increase in U.S. unemployment signaled a worsening global economic slump, reducing demand for higher- yielding assets.
The Australian currency declined against the U.S. dollar as the S&P/ASX 200 Index of stocks fell 1.4 percent. Advertisements for job vacancies in the South Pacific country slumped for an eighth month in December to levels indicating the economy will enter a recession in the next nine months, according to an Australia & New Zealand Banking Group Ltd. report.
“What we are seeing on the Australian dollar this morning is a follow-through risk aversion from the U.S. non-farm payrolls on Friday night and this is weighing on Asian stocks,” said David Forrester, a currency economist at Barclays Capital in Singapore. “The Australian jobs ads don’t normally have a large impact but this morning, the record drop just adds to the already nervous market.”
Australia’s dollar fell 1.8 percent to 69.28 U.S. cents at 5:58 p.m. in Sydney from 70.34 cents late in New York trading on Jan. 9. The currency dropped to 62.44 yen from 63.59.
The U.S. lost 2.59 million jobs in 2008, more than any year since 1945, as employers fired another 524,000 people in December, the Labor Department reported on Jan. 9. The unemployment rate climbed to a 15-year high of 7.2 percent last month. The Standard & Poor’s 500 stock index slumped 2.1 percent that day.
The Australian dollar will be “weak” this week, Forrester said, as domestic jobs data due on Thursday will be “worse than market consensus.” He forecasts the currency will trade between 67.75 and 70 U.S. cents this week.
Weak Chinese Data
Australia’s dollar may also be weighed down by Chinese export figures, Forrester said. Shipments from China fell 5.3 percent in December, declining for a second month, according to a Bloomberg New survey. The customs bureau is due to report the data as early as today.
“China has overtaken Japan as Australia’s top Asian trade partner and a weak Chinese number will definitely weigh on the Aussie,” Forrester said, referring to the currency by its nickname.
New Zealand’s dollar declined 1.2 percent to 58.52 U.S. cents, from 59.20 cents in New York on Jan. 9. It traded at 52.75 yen, versus 53.49 yen.
The kiwi, as it is commonly known, will trade between 57.40 and 59.00 U.S. cents, Forrester predicted.
Jobs advertised in Australian newspapers and on the Internet plunged 9.7 percent last month to an average of 190,661 a week, after falling 8.6 percent in November, according to a report released in Melbourne today. Newspaper ads plummeted 51.8 percent from a year earlier, the most since 1982.
‘A Reality Check’
“Last week’s weak global data provided a reality check and reaffirmed that the global outlook for 2009 remains dismal,” said Danica Hampton, currency strategist at Bank of New Zealand Ltd. in Wellington. “Any further losses in global equities should see investors ditch growth-sensitive currencies like the New Zealand dollar.”
The benchmark interest rate in New Zealand is 5 percent, compared with 0.1 percent in Japan and as low as zero in the U.S., which had made the South Pacific nation an attractive destination for international investors seeking higher returns via so-called carry trades. Australia’s key lending rate is 4.25 percent.
Australian government bonds rose for a fourth day on speculation that the weak economic data will spur the Reserve Bank of Australia to trim interest rates at its next policy review in February.
The yield on the 10-year note fell two basis points, or 0.02 percentage point, to 4.10 percent, according to data compiled by Bloomberg. The price of the 5.25 percent security due March 2019 climbed 0.162, or A$1.62 per A$1,000 face amount, to 109.464.
New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, was down six basis points at 4.23 percent.
To contact the reporter on this story: Patricia Lui in Singapore at plui4@bloomberg.net
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