Australian Dollar Rises on Signs of U.S. Economic Recovery, Stock Gains

The Australian dollar rose, extending its gains this week, reporting suggesting rising U.S. growth boosted demand for higher-yielding currencies.

The so-called Aussie strengthened to a two-week high against the yen as Asian stocks extended a rally in global equities. The New Zealand currency, known as the kiwi, briefly pared a weekly advance after an earthquake struck near the city of Christchurch. Demand for the South Pacific nations’ currencies was limited as Italy prepares to sell bonds next week amid concern Europe’s debt crisis will weigh on global growth.

“Everyone’s got their fingers crossed for the Santa rally, and I think better U.S. economic data is probably enough to give some better price actions in the higher-yielding currencies like the Aussie and the kiwi,” said Robert Rennie, Sydney-based chief currency strategist at Westpac Banking Corp., Australia’s second-largest lender. “One of the things on the top of my Santa list is to get an opportunity to sell the Aussie at higher levels over the holidays.”

The Australian dollar advanced 0.3 percent to $1.0162 at 1:17 p.m. in New York. It has gained 1.8 percent this week. The currency rose as much as 0.4 percent to 79.51 yen, the highest level since Dec. 8, before trading at 79.30.

New Zealand’s dollar dropped as much as 0.3 percent from yesterday following the quake, before trading at 77.47 U.S. cents from 77.44 cents in New York. The so-called kiwi has appreciated 1.7 percent versus the dollar since Dec. 16.

N.Z. Quake

Christchurch, New Zealand’s second-largest city, was struck by a magnitude-5.8 earthquake and a series of aftershocks shortly before 2 p.m. today. The temblor was 8 kilometers (5 miles) deep and centered 20 kilometers north-east of the city, New Zealand’s GeoNet reported. Police said there were no reports of widespread damage or serious injuries.

“Although today’s Christchurch earthquake has been reported to have caused little structural damage, the New Zealand dollar has still seen some knee-jerk downward pressure,” Todd Elmer, head of Group-of-10 currency strategy for Asia excluding Japan at Citigroup Inc. in Singapore, wrote in a note to clients today. “We would look to buy into any further New Zealand dollar dip on the basis of the earthquake.”

The MSCI Asia Pacific Excluding Japan Index (MXAPJ) rallied 1.3 percent today after the Standard & Poor’s 500 (SPX) Index of stocks rose 0.8 percent yesterday. Japanese markets are shut today for a holiday.

U.S. Spending, Goods

Personal spending in the U.S. climbed 0.1 percent for a second month, while wages and salaries fell 0.1 percent from October, Commerce Department data showed today in Washington. Durable goods orders jumped 3.8 percent in November as a surge in aircraft bookings masked a drop in demand for business equipment.

Italy will offer debt maturing in 2014, 2018, 2021 and 2022 on Dec. 29 after Prime Minister Mario Monti’s 30 billion-euro ($39 billion) emergency budget plan won final approval in Parliament yesterday. Monti’s Cabinet is scheduled to hold a meeting today.

Yields on Italy’s benchmark 10-year debt rose 6 basis points to 6.98 percent today.

“Europe risks a downward spiral, where fiscal austerity weakens those local economies,” said Westpac’s Rennie. “Unfortunately, when we come back in January, I think we’re going to come back to a pretty bleak outlook.”

The Australian dollar has fallen 0.7 percent against the greenback this year and the New Zealand dollar has also dropped 0.7 percent.

Australia’s 10-year bond yields slid one basis point, or 0.01 percentage point, to 3.74 percent.

To contact the reporter on this story: Monami Yui in Tokyo at myui1@bloomberg.net

To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net

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