Australia’s dollar rose to a five- week high against New Zealand’s before a report forecast to show the jobless rate fell in the larger South Pacific nation, fueling speculation the central bank will raise interest rates. The so-called Aussie strengthened for the fifth time in six days against the kiwi after reports showed Australian home-loan approvals increased in October and New Zealand construction declined. Both currencies dropped for a third day against the greenback as the extra yield offered by the South Pacific nations’ bonds over Treasuries were near two-month lows. “The focus is very much on the employment figures out tomorrow, more so as an indicator as to when the RBA may move in the new year,” said Tim Waterer, a foreign exchange dealer at CMC Markets in Sydney. “There’s increased buying interest in the Aussie.” Australia’s currency rose to NZ$1.3001 as of 5:01 p.m. in Sydney from NZ$1.2980 yesterday in New York, after climbing to NZ$1.3045, the strongest since Nov. 2. The so-called Aussie declined to 97.86 U.S. cents from 98.29 cents, and bought 82.13 yen from 82.07 yen. New Zealand’s dollar weakened 0.6 percent to 75.28 U.S. cents, and bought 63.16 yen from 63.21 yen. Australian employers added 20,000 jobs in November, taking the jobless rate down to 5.2 percent from 5.4 percent in the previous month, according to a Bloomberg survey before tomorrow’s statistics bureau report. Home-loan approvals rose 1.9 percent in October from the previous month, the bureau said today, outpacing the forecast for no change in a separate Bloomberg survey. Construction Shrinks New Zealand’s weakened against 15 of its 16 major counterparts after the government said manufacturing sales volumes shrank 1.4 percent in the third quarter. The value of residential construction fell 5.3 percent from the previous three months, excluding inflation, a separate report showed. The Reserve Bank of New Zealand will lower its forecasts for growth in the year ending March 31, 2011, from 2.8 percent, said Darren Gibbs, chief New Zealand economist at Deutsche Bank AG in Auckland. Central bank Governor Alan Bollard will leave the official cash rate at 3 percent tomorrow, according to all 14 economists surveyed by Bloomberg. Ten analysts expect a rate increase in March and four forecast one in the second quarter of 2011, the survey showed. ‘More Dovish’ “The Reserve Bank will be more dovish and talk about interest rates being on hold for a reasonable period of time,” said Alex Sinton, a senior dealer in Auckland at ANZ National Bank Ltd. New Zealand’s currency may weaken to 75 U.S. cents and Australia’s may fall toward 97.80 cents, Sinton said. The extra yield investors get from buying Australia’s two- year government debt instead of similar-dated Treasuries shrank to 4.25 percentage points yesterday, near the 4.22 points touched on Dec. 2 that was the narrowest since Sept. 16. The premium offered by three-year government debt in New Zealand over the U.S. contracted to 3.21 percentage points today, the least since Oct. 1. Treasuries fell for a second day today, sending yields on benchmark 10-year notes as high as 3.20 percent, the most since June 22. Yields jumped 21 basis points yesterday. To contact the reporter on this story: Candice Zachariahs in Mumbai at czachariahs2@bloomberg.net To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net.

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