Australian bonds fell, pushing the benchmark 10-year yield to its highest in 17 months, before a U.S. Labor Department report that may show jobs growth accelerated last month in the world’s largest economy.
The Aussie and New Zealand dollars maintained declines from yesterday on prospects the report will fuel expectations that the Federal Reserve will reduce its bond purchases this month, slowing a program that has devalued the greenback. Both currencies are set to advance this week on data showing China’s manufacturing expanded and the euro-area economy returned to growth. The Aussie’s share of global currency turnover rose one percentage point to about 8.5 percent, the central bank said today citing a survey by the Bank for International Settlements.
“The U.S. growth story is very important as is the better economic data coming out of Europe, because if you get a recovery in global demand, that benefits Australian exports,” said Philip Brown, a fixed-income strategist in Melbourne at Commonwealth Bank of Australia, the nation’s largest bank. “There is scope for the bond market to keep selling off, though it should slow a bit.”
Australia’s 10-year bond yield rose as much as eight basis points to 4.151 percent, the most since April 2012, and was as 4.15 at 10:05 a.m. in Sydney. It has climbed 25 basis points since Aug. 30, set for the largest increase in three weeks. The three-year rate touched 2.986 percent, the highest since June 24. A basis point is 0.01 percentage point.
The Aussie traded at 91.20 U.S. cents, little changed from yesterday’s close of 91.22 and up 2.5 percent this week. It fell 0.1 percent to 91.26 yen, paring its weekly advance to 4.4 percent, the most since the period ended Dec. 2, 2011.
New Zealand’s kiwi rose 0.1 percent to 78.90 U.S. cents. It gained 2.1 percent since Aug. 30, ending a two-week slide. The currency was little changed at 78.99 yen and traded 4.1 percent higher from the end of last week.
The U.S. Labor Department is forecast to say today that payrolls rose by 180,000 in August, from 162,000 the previous month, while the jobless rate held at 7.4 percent, according to the median estimate in a Bloomberg News poll.
A Bloomberg survey of economists last month showed that 65 percent expected that the Fed will start unwinding its $85 billion a month bond-buying program at this month’s meeting.
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