Australia’s dollar fell for a second day after a government report showed full-time employment dropped in January, fueling concern the economy is growing too slowly to prompt the central bank to raise interest rates. The so-called Aussie weakened against all except one of its 16 most-traded counterparts as swap traders reduced expectations for how much borrowing costs will rise over the next year. New Zealand’s dollar slipped as Asian stocks declined and economists said a report next week will show retail sales fell in December. “A drop in full-time employment will probably temper the markets in terms of the Aussie dollar rising higher,” said Jonathan Cavenagh, a currency strategist in Singapore at Westpac Banking Corp. The overall job data “suggest the labor market is in a pretty good shape, at least on the surface.” Australia’s dollar fell to $1.0070 as of 4:20 p.m. in Sydney from $1.0124 in New York yesterday, when it dropped 0.2 percent. The currency weakened 0.3 percent to 83.08 yen. New Zealand’s dollar slipped 0.3 percent to 77.04 U.S. cents, and traded at 63.56 yen from 63.61 yen. The MSCI Asia Pacific Index of shares dropped 0.6 percent. Australian full-time employment declined by 8,000 in January, the statistics bureau said today in Sydney. Employers added 24,000 jobs, an 11th month of gains. That compared with the median forecast of a 17,500 increase in a Bloomberg News survey of economists. Rate Outlook Swaps traders expect Reserve Bank of Australia Governor Glenn Stevens will increase the benchmark by 42 basis points over the next 12 months, down from a prediction of 47 basis points yesterday, according to a Credit Suisse AG index. The Aussie briefly rose after the release of the jobs data. The statistics bureau said flooding in Queensland disrupted its survey of unemployment in the state and reduced the quality of its jobs estimates. Floods last month inundated much of the state, including parts of the capital, Brisbane. “The market is very confused because there are effects of the Queensland floods making it a bit difficult for traders to see what is going on,” said Joseph Capurso, a currency strategist at Commonwealth Bank of Australia in Sydney. “The report is a strong one once you take out the Queensland part. It certainly keeps the Reserve Bank of Australia still in play when it comes to interest rates and I think the Aussie won’t fall more than it has already fallen earlier today.” New Zealand Economy New Zealand’s currency dropped for a second day after Finance Minister Bill English said yesterday the nation’s recovery is going to have some challenges. The economy may have contracted in the fourth quarter of 2010, entering its second recession in two years, he said. Retail sales declined 0.4 percent from November, when they rose 1.5 percent, according to economists surveyed by Bloomberg before the Feb. 14 report. Australian bond futures rose. The 10-year contract for March delivery climbed 0.04 to 94.275 on the Sydney Futures Exchange. The implied yield fell 4 basis points to 5.73 percent. New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, gained one basis point to 3.85 percent. To contact the reporter on this story: Monami Yui in Tokyo at myui1@bloomberg.net. To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net.

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