By Candice Zachariahs Feb. 11 (Bloomberg) -- The Australian dollar rose to the highest level in a week and government bonds fell as employers added more than three times as many jobs as economists had forecast, increasing demand for the nation’s assets. The Aussie climbed against all 16 major counterparts after a government report showed the number of people employed increased by 52,700 last month, the biggest advance since December 2006. The unemployment rate fell to 5.3 percent from 5.6 percent, prompting traders to increase bets the central bank will raise rates in March. New Zealand’s currency rose after a government report showed food prices increased. There was “a big boost for the Aussie on the back of that labor force number,” said Amber Rabinov, an economist in Melbourne at Australia & New Zealand Banking Group Ltd. “The numbers put more emphasis behind the feeling that the unemployment rate has peaked and we’re now seeing it steadily head lower.” Australia’s currency surged to 88.88 U.S. cents as of 4:39 p.m. in Sydney from 87.55 cents in New York yesterday. It reached as high as 88.95 cents, the strongest level since Feb. 3. The currency gained 1.5 percent to 79.86 yen. New Zealand’s dollar advanced 0.9 percent to 69.91 cents, and climbed 0.8 percent to 62.82 yen. Both currencies extended gains after China said consumer prices rose 1.5 percent in January from a year earlier, slower than economists’ expectations for a 2.1 percent increase. China is Australia’s largest trading partner and weaker inflation data damped speculation Chinese authorities would extend efforts to curb growth in Asia’s second-largest economy. Australian Jobs Food prices in New Zealand rose 2.1 percent in January from the previous month, the first gain in six months, Statistics New Zealand said in Wellington today. New Zealand’s two-year swap rate, a fixed payment made to receive floating rates which is sensitive to interest-rate expectations, rose to 4.32 percent from 4.27 percent yesterday. 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 Gains The Australian currency climbed on speculation five months of job gains, the longest stretch since April 2008, may prompt central bank Governor Glenn Stevens to raise rates on March 2 after he unexpectedly kept them unchanged this month. Economists in a Bloomberg survey estimated Australia had added 15,000 jobs. Swaps traders pushed up the odds of a rate increase at the next central bank meeting to 50 percent, from 26 percent yesterday, a Credit Suisse Group AG index shows. Australian government bonds fell. The yield on two-year government securities rose to 4.23 percent from 4.17 percent yesterday, according to data compiled by Bloomberg. The yield on the benchmark 10-year notes added seven basis points to 5.52 percent. The 5.25 percent security due March 2019 slipped 0.52, or A$5.20 per A$1,000 face amount, to 98.06. Australia & New Zealand Banking Group Ltd. lowered its forecasts for the Australian dollar today saying it will likely trade at 89 cents by March before falling to 85 cents by December driven by strength in the U.S. currency. The bank expects New Zealand’s currency to buy 70 cents in the first quarter and 65 cents by end-2010. St. George Bank Ltd. lowered its call for the Aussie to 85 cents by March and 93 cents by year-end, saying expectations of interest-rate increases in the rest of the world will rise in late 2010. To contact the reporter on this story: Candice Zachariahs in Sydney at czachariahs2@bloomberg.net

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