Aussie Near Four-Month High on Domestic Economy Optimism

Australia’s dollar was 0.6 percent from its highest level in more than four months after data showed home-loan approvals rose in June by the most this year, adding to signs of improvement in the economy.

New Zealand’s so-called kiwi dollar declined against all of its major peers for a second day after Prime Minister John Key said there may be scope for the central bank to lower borrowing costs. Demand for both South Pacific nations’ currencies was tempered before data that may show weakness in German industrial production and Chinese retail sales, adding to concern the global economy is slowing.

“The domestic story is positive” in Australia, said Sean Callow, a senior currency strategist at Westpac Banking Corp. (WBC) in Sydney. “There are certainly reasons to be concerned about the global situation. But in general right now, it doesn’t seem to be a very clever time to be trying to short the Aussie dollar.” A short position is a bet an asset may decline.

The Australian dollar was at $1.0545 as of 4:10 p.m. in Sydney from $1.0554 yesterday, when it reached $1.0604, the strongest since March 20. It slid 0.4 percent to 82.68 yen. The kiwi lost 0.4 percent to 81.25 U.S. cents. It declined 0.7 percent to 63.72 yen.

Australian Economy

The number of loans granted to build or buy houses and apartments in Australia climbed 1.3 percent in June after a revised 0.9 percent drop in the the previous month, the Bureau of Statistics said today. That’s the biggest gain since December and compares with economist forecasts for a 2 percent advance.

Figures tomorrow may show the number of people employed increased by 10,000 last month after dropping 27,000 in June, according to forecasts in a separate poll. The jobless rate probably climbed to 5.3 percent from 5.2 percent.

The Aussie has advanced 5.7 percent in the past three months, the best performance among the 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The kiwi was the second-biggest gainer, rising 4.5 percent.

Ten-year government note yields in Australia rose seven basis points, or 0.07 percentage point, to 3.33 percent. New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, lost five basis points to 2.84 percent.

The New Zealand dollar weakened after Prime Minister Key signaled yesterday that the onus is on the nation’s central bank and private investors to aid economic growth as he seeks to eliminate a budget deficit.

“The government’s preferred position is not to be stimulatory,” he said in an interview in Christchurch. “We want to get back to surplus.”

German industrial production may have fallen 0.8 percent in June after rising 1.6 percent in the previous month, according to another survey before figures due today. A report tomorrow may show retail sales growth in China decelerated to 13.5 percent in July from a year earlier from 13.7 percent in June. That would be the slowest pace since February last year.

To contact the reporters on this story: Kristine Aquino in Singapore at kaquino1@bloomberg.net; Sharon Chen in Singapore at schen462@bloomberg.net

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

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