Australian dollar edges closer to greenback parity, gains against kiwi

Thursday 7th October 2010

The Australian dollar surged against the greenback, making parity more likely, and advanced against the kiwi dollar after stronger-than-expected jobs growth stoked expectations interest rates will rise soon.

The Australian dollar rose as high as 98.47 US cents after Australia added 50,000 jobs to its economy last month, more than the 20,000 forecast. It recently traded at 98.39 cents. Its last tilt at parity, in July 2008, saw the Australian dollar reach 98.50 cents. Investors are shunning the US dollar amid speculation the Federal Reserve will ramp up its asset purchases next month after a slew of central bankers threw their weight behind quantitative easing this week.

“This is a better time for the Aussie to get to parity – the US economy is in a weaker condition,” said a trader at Bank of New Zealand. “The difference between the two economies is massive.”

The kiwi fell to 76.58 Australian cents from 76.97 cents earlier today after the Australian jobs report, and rose to 75.36 cents from 75.21 cents.

The New Zealand currency will get dragged higher against the greenback if the Australian dollar makes parity, and the trader said they’re target is around US$1.05 if it breaks through the barrier.

The next major event risk will come tomorrow in the US when non-farm payrolls data are released for last month. Private payrolls out yesterday showed the US unexpectedly shed 39,000 in the private sector last month.

Businesswire.co.nz

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