Australian Dollar Trades Near 25-Year High

The Australian dollar traded near a 25-year high before a government report this week that is forecast by economists to show employment rebounded last month.

The currency may extend its three-week winning streak on speculation signs the economy is weathering a global slowdown will put pressure on the central bank to raise interest rates for a third time this year. Australia's dollar traded near a seven-year high versus New Zealand's as a report today showed consumer confidence there fell to a record low.

The Australian dollar bought 96.28 U.S. cents as of 8:41 a.m. in Sydney, compared with 96.34 cents in late New York on July 4 and a 25-year high of 96.68 cents reached June 30. The currency traded at NZ$1.2684 from NZ$1.2702 on July 4 when it touched NZ$1.2729, the strongest level since January 2001.

Australia's dollar will reach parity with the U.S. dollar this year, Trinh said. RBC, a unit of Canada's biggest bank, is one of three banks predicting the two currencies will trade one for one this year among 33 surveyed by Bloomberg News. The median estimate is for an exchange rate of 91 cents by year-end.

Companies added 10,000 workers in June after cutting 19,700 in May, according to the median estimate of 22 economists surveyed by Bloomberg before the report released by the statistics bureau on July 10.

Australia's dollar has risen 9.7 percent this year as the Reserve Bank of Australia has increased its benchmark overnight cash-rate target twice to a 12-year high of 7.25 percent to slow inflation. By comparison, the Federal Reserve's similar borrowing cost is 2 percent following seven cuts since September.

Australian Dollar Trades Near 25-Year High, Bloomberg
7/6/2008 5:26:34 PM