Australia, NZ dollars gain against yen; US jobs report eyed

[SYDNEY] The Australian and New Zealand dollars gained against the yen on Friday after the Bank of Japan offered to buy an unlimited amount of the country's government bonds (JGBs) to stem a rise in yields, reaffirming its super easy policy.

The BOJ also increased its buying of five-to-ten year JGBs through an auction to 500 billion yen (S$6.08 billion) from 450 billion yen.

The Australian dollar rose 0.4 per cent against the yen to near a 3-1/2 month high hit earlier this week while the New Zealand dollar climbed to a six-month peak.

"The BOJ signalled their intention to remain committed to the current monetary policy stance while other major central banks are moving towards hawkish stance. So far today, JPY was the underperformer within the G-10 camp," JP Morgan said in a note.

But the antipodean currencies dwindled to one-month lows on the euro after minutes of the European Central Bank's June meeting showed policymakers were preparing to dial back its stimulus policy of ultra-low rates and massive bond purchases.

Elsewhere, the Aussie stood near a two-week low on the greenback ahead of the US labour market report due later in the day. Economists polled by Reuters expect US employers to have added 179,000 jobs last month, above May's relatively small gain of 138,000.

The Aussie is set to end the week down 1.4 per cent, the poorest show since early April. The drag came from the Reserve Bank of Australia (RBA) which resisted pressure to turn hawkish on interest rates at its policy meeting on Tuesday.

Across the Tasman Sea, the kiwi stayed trapped in a tight range but within sight of a five month peak of US$0.7347 touched last week.

It was set to fall 0.75 per cent on the week, its first weekly drop since mid-May.

"Volatility means NZD/USD may well see 0.73 again - all we need is soft US data tonight - but it is unlikely to be sustained given the changing global backdrop," said David Croy, senior rates strategist at ANZ Bank, saying that globally central banks were beginning to shift to a more hawkish tone.

The antipodean currencies are seen holding up in the near term although further gains are seen capped, a Reuters poll of 52 analysts showed.

New Zealand government bonds eased, sending yields seven basis points up at the long end of the curve.

Australian government bond futures sank, with the three-year bond contract slipping seven ticks to 97.97. The 10-year contract skidded 8.5 ticks lower to 97.2750.

REUTERS