Australia Dollar Falls

The Australian dollar fell to the lowest in almost a month after a government report showed the first drop in employment since October 2006, prompting traders to reduce bets on the central bank raising interest rates again.

Australia's currency was the worst performer among the 16 most-traded as the unexpected decline in employment signaled two interest-rate increases this year may have been enough to slow the economy and cool inflation. Australian two-year bonds rose the most in almost two months, reducing the yield advantage over similar-maturity Treasuries to the least in three weeks.

The Australian currency fell 1.1 percent to 93.77 U.S. cents as of 1:08 p.m. in Sydney from 94.79 cents in late Asian trading yesterday. It was at 94.63 before the report was released. The currency will find support at about 93.30 cents, Johnson said.

The chances the central bank will raise interest rates from a 12-year high by a quarter-percentage point by September fell to 48 percent from 74 percent before the report was released, according to 30-day interbank contracts traded on the Sydney Futures Exchange.

Companies cut 19,700 workers last month, the Bureau of Statistics said in Sydney today. The median estimate of 22 economists surveyed by Bloomberg News was for a 13,500 gain. The jobless rate held at 4.3 percent from April.

The Australian dollar's decline was limited as the UBS Bloomberg Constant Maturity Commodity Index rose 2.5 percent to a record. The Reuters/Jefferies CRB Index gained as much as 2.8 percent to its highest ever. The prices of raw materials tend to influence the Australian dollar because they contribute about 17 percent to the economy via exports.

Australia Dollar Falls, Bloomberg
6/11/2008 8:47:00 PM