Australian Dollar Advances to Six-Month High as Reserve Bank Holds Rates

Australia’s dollar climbed to the highest in six months versus its U.S. counterpart after Reserve Bank policy makers unexpectedly left interest rates unchanged and signaled optimism global economic growth will strengthen.

The Aussie climbed against all of its 16 most-traded peers after central bank Governor Glenn Stevens said sentiment in financial markets had “generally improved” since December. New Zealand’s dollar rose to a three-month high versus the yen as Greece’s government and international creditors worked on the final draft of an agreement on budget and structural measures needed to free up a second aid package, a Greek official said.

“Leaving the cash rate at 4.25 percent was a big surprise to consensus, so it’s not surprising to see Aussie jumping,” said Sue Trinh, a senior currency strategist at Royal Bank of Canada in Hong Kong. “The RBA has left the door open for a rate cut going forward, but the onus is going to be on the data.”

Australia’s dollar rose 0.7 percent to $1.0799 at 10:27 a.m. New York time. It touched $1.0823, the strongest level since Aug. 2. The currency climbed 1 percent to 82.95 yen.

New Zealand’s dollar, nicknamed the kiwi, was 0.1 percent stronger at 83.47 U.S. cents and advanced 0.4 percent to 64.09 yen. It reached 64.22 yen, the highest level since Oct. 31.

“With growth expected to be close to trend and inflation close to target, the board judged that the setting of monetary policy was appropriate for the moment,” Stevens said in a statement accompanying the decision.

The RBA lowered its benchmark interest rate by a quarter- percentage point on Nov. 1 and again on Dec. 6. Only three of 27 economists surveyed by Bloomberg News predicted policy makers would leave rates unchanged today.

Greek Talks

The Greek document is being drafted at a meeting between Finance Minister Evangelos Venizelos and representatives of Greece’s creditors and will be discussed by political leaders later in the day, a government official told reporters in Athens today on customary condition of anonymity.

New Zealand’s economic outlook has deteriorated since a pre-election update was published in November amid an escalation of Europe’s debt crisis, the Treasury Department said in a report on its website. The economy probably expanded 0.6 percent in the three months ended Dec. 31, it said.

To contact the reporter on this story: Candice Zachariahs in Sydney at czachariahs2@bloomberg.net

To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.