By Candice Zachariahs and Yasuhiko Seki Dec. 2 (Bloomberg) -- The Australia and New Zealand dollars rose for a third day as demand for riskier assets revived before an industry report that economists said will show U.S. employers cut the fewest jobs in more than a year. Australia’s currency gained as gold, the nation’s third most-valuable raw material export, climbed to a record and a gauge of metals prices yesterday rose to the strongest since September 2008. The New Zealand dollar extended yesterday’s biggest gain since Nov. 13 as Auckland-based Fonterra Cooperative Group Ltd., the world’s largest dairy producer, said whole milk powder prices at auction increased to a 16-month high. “Anything related to U.S. employment is very sensitive at the moment and the Australian dollar is going to react to that number,” said Tim Waterer, a foreign-exchange dealer at CMC Markets in Sydney. “A better-than-forecast number will be a signal to investors to resume the long trades in growth- sensitive currencies like the Aussie.” Australia’s currency rose 0.2 percent to 92.70 U.S. cents as of 4:20 p.m. in Sydney from 92.50 cents in New York yesterday. The currency gained 0.6 percent to 80.65 yen. New Zealand’s dollar strengthened to 72.70 U.S. cents from 72.59 cents, and climbed to 63.24 yen from 62.92 yen. The Australian dollar may advance toward 93 U.S. cents and New Zealand’s currency may gain to 72.90 cents, Waterer said. 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. Job Cuts U.S. companies cut an estimated 150,000 jobs in November, the fewest since July 2008, according to a Bloomberg News survey before the report from ADP Employer Services today. The U.S. Labor Department’s jobs report will be released Dec. 4. Demand for New Zealand’s dollar was boosted as whole milk powder for February delivery rose to $3,523 a metric ton, according to Fonterra’s GlobalDairyTrade Web site. It was the fifth straight monthly increase and the highest price since August last year when near-month powder sold for $3,754 a ton. From a year earlier, prices rose 70 percent. Australia’s dollar gained as the London Metals Index, tracking the prices of copper, aluminum, lead, tin, zinc and nickel, rose 1.9 percent. Commodity shipments account for more than half the South Pacific nations’ exports. Stock Gains The Australian and New Zealand dollars also rose for a third day against the yen as renewed risk appetite boosted demand for riskier assets. The MSCI Asia Pacific Index of shares advanced 0.5 percent, after gaining 1.5 percent yesterday. “Rising stocks will spur buying of cross currencies against the yen,” said Akane Vallery Uchida, foreign-currency strategist in Tokyo at Royal Bank of Scotland Group Plc. “We expect gains in Australia’s and New Zealand’s dollar in particular.” Australia’s currency may test this year’s high of 94.06 cents, reached Nov. 16, if it rises above the 92.85 to 93.30- cent levels, Niall O’Connor, a technical analyst in New York at JPMorgan Chase & Co. wrote in a note. In addition, the “73.35 to 73.70-cent levels are important for kiwi,” he wrote. Australian government bonds fell, ending a four-day gain. The yield on 10-year notes added 10 basis points, or 0.10 percentage point, to 5.33 percent, according to data compiled by Bloomberg. The price of the 5.25 percent security due March 2019 slipped 0.685, or A$6.85 per A$1,000 face amount, to 99.394. New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, fell to 4.30 percent from 4.34. To contact the reporter on this story: Candice Zachariahs in Sydney at czachariahs2@bloomberg.net; Yasuhiko Seki in Tokyo at yseki5@bloomberg.net.

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