N.Z. Dollar Gains After S&P Affirms Credit Rating
New Zealand’s dollar rose, set for a third weekly advance, after Standard & Poor’s affirmed the nation’s credit rating and said its outlook is stable.
The so-called kiwi climbed versus all but one of its 16 major counterparts this week. Australia’s currency pared a five- day loss on prospects Reserve Bank officials will leave the highest borrowing costs among major developed nations unchanged at an Aug. 7 meeting. Demand for the South Pacific nations’ dollars was tempered before a report that may show hiring in the U.S. failed to lower the unemployment rate, sapping demand for higher-yielding assets.
“The kiwi was slightly supported after S&P affirmed New Zealand’s rating,” said Lee Wai Tuck, a currency strategist at Forecast Pte in Singapore. “I still think the risk is to the downside. The kiwi will still be affected by concerns over the global economy.”
New Zealand’s dollar rose 0.4 percent to 81.32 U.S. cents as of 4:37 p.m. in Sydney, set for a 0.4 percent advance this week. It gained 0.4 percent to 63.64 yen today. The so-called Aussie added 0.2 percent to $1.0485 and was little changed from July 27. It rose 0.2 percent to 82.04 yen.
S&P affirmed New Zealand’s rating, citing its fiscal flexibility, resilient economy and policy institutions conducive to swift and decisive policy reform. “These strengths are offset by its high external debt and weak external liquidity,” the company said in a statement today.
The Australian dollar pared its first weekly loss in a month as investors reduced expectations for interest-rate cuts when RBA officials meet next week. Swaps data compiled by Bloomberg indicate a 79 percent chance officials will keep the overnight cash rate target at 3.5 percent, up from 32 percent odds seen on July 20.
All but one of 27 economists surveyed by Bloomberg News say the cash rate will be unchanged at next week’s gathering. One called for a decline by 25 basis points to 3.25 percent.
The Aussie has advanced 5.4 percent in the past three months, the best performance after the yen among the 10 developed-nation currencies tracked by Bloomberg Correlation- Weighted Indexes. The kiwi was the third-biggest gainer, rising 4.9 percent in the same period.
Ten-year government note yields in Australia fell four basis points, or 0.04 percentage point, to 3.12 percent. New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, rose two basis points to 2.78 percent.
Gains in the Australian and New Zealand dollars were limited on prospects unemployment in the U.S. remained above 8 percent.
The jobless rate in the world’s biggest economy was probably unchanged at 8.2 percent last month, even as payrolls are predicted to have increased by 100,000, according to the median estimate of economists surveyed by Bloomberg News before figures from the Labor Department today. Employers added 80,000 jobs in June.
“The Aussie will be subdued and there’ll be cautious trading” before the data from the U.S., said Andrew Salter, a currency strategist in Sydney at Australia & New Zealand Banking Group Ltd. (ANZ) “We’re expecting the Aussie dollar to edge lower as it eventually reflects the cycle in global growth, which is quite weak at the moment.”
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