BLBG: Aussie, Loonie to Gain Against Yen as Dollar Recovers
By Candice Zachariahs
Dec. 7 (Bloomberg) -- The Australian and Canadian dollars are likely to gain versus the euro and yen as the U.S. currency may end its “death dive” after a U.S. jobless report was better than forecast, Royal Bank of Scotland Group Plc said.
The U.S. Dollar Index, which tracks the greenback against six major currencies, gained the most since January on Dec. 4 after a report showed the U.S. jobless rate unexpectedly fell in November, spurring speculation the Federal Reserve may increase interest rates sooner. Rates are close to zero in the U.S. and Japan while Europe’s are at a record low of 1 percent.
“From a tactical trading perspective the next trade to follow should be buy riskier high-yielders against the other major currencies -- yen and euro,” Greg Gibbs, a foreign- exchange strategist at Royal Bank of Scotland in Sydney, wrote in a note to investors. “Confidence in a global recovery supported by easy global monetary policy should tend to favor high beta currencies.”
Australia’s currency fell 0.4 percent to 82.52 yen as of 1:25 p.m. in Sydney from 82.83 yen in New York last week. It traded at A$1.6243 per euro. Canada’s dollar fell to 85.37 yen from 85.59 yen on Dec. 4 and traded at C$1.5698 per euro.
Improving Jobs Data
A recovery at home and abroad will support higher-yielding currencies such as those of Australia and Canada, Gibbs said.
Australia’s dollar pared losses today as advertisements for job vacancies jumped in November by the most since May 2007. The statistic bureau will probably say Dec. 10 that Australian employers added 5,000 positions in November, a second straight month of increases, according to the median forecast of 22 economists in a Bloomberg News survey.
Canadian employers added more than five times as many jobs as expected in November, helping the jobless rate fall to 8.5 percent, Statistics Canada said Dec. 4.
In the U.S., payrolls fell by 11,000, figures from the Labor Department showed Dec. 4, compared with the median forecast for a 125,000 decline in a Bloomberg News survey. The jobless rate declined to 10 percent.
“The market should not expect the Fed to pounce on the data and start tightening near term,” Gibbs wrote. “Eventually the prospect of low rates (even if they are above zero) into the years ahead will prevent a complete turn around” in the U.S. dollar, he said.
To contact the reporter on this story: Candice Zachariahs in Sydney at czachariahs2@bloomberg.net
