Aussi Holds Gains After Unemployment Rate Declines


The Australian dollar held gains after a government report showed the unemployment rate fell by more than economists expected in December, supporting bets the central bank will raise its benchmark interest rate this year.

The local dollar is the second-best performer today among the 16 most-active currencies on speculation the longest run of monthly job gains since 1980 will feed inflation. The currency snapped a two-day loss as the yield advantage of the nation's two-year government bonds over similar-maturity U.S. Treasuries widened to the most since 1991.

The Australian dollar climbed to 88.12 U.S. cents at 12:09 p.m. in Sydney from 87.54 cents late in Asia yesterday. It may rise to 90 cents in the next week, Grace said.

The currency strengthened to 94.42 yen compared with 92.81 yesterday, when it slumped 4 percent to a four-month low.

The Australian dollar has gained 12 percent against the U.S. currency in the past year as the Reserve Bank of Australia raised its overnight cash rate target to an 11-year high of 6.75 percent to alleviate inflationary pressures.


TradingEconomics.com, Bloomberg
1/17/2008 6:52:44 AM