Aussie Rises From 2-Week Low on China Stimulus Prospects

Australia’s dollar rebounded from a two-week low amid speculation China will act to support growth in the world’s biggest commodities consumer, brightening the export outlook for the South Pacific nation.

Australian bonds pared earlier gains as Asian stocks rose, curbing demand for the relative safety of government securities. New Zealand’s dollar advanced for a second day after data showed the nation’s business outlook improved this month. Gains for the so-called Aussie and kiwi were limited as anti-austerity protests in Spain and Greece damped demand for riskier assets.

“If you do see more speculation of help for China that will be a big factor supporting the Aussie,” said Mitul Kotecha, head of global foreign-exchange strategy at Credit Agricole CIB in Hong Kong. “Despite all the negativity elsewhere, a bit of resilience is coming through.”

The Aussie dollar rose 0.4 percent to $1.0409 as of 5:55 p.m. in Sydney. It yesterday touched $1.0329, the weakest since Sept. 11. It added 0.3 percent to 80.88 yen. The New Zealand dollar advanced 0.3 percent to 82.63 U.S. cents following a 0.3 percent gain yesterday. It bought 64.21 yen from 64.08.

The yield on Australia’s 10-year notes declined four basis points, or 0.04 percentage point, to 3.02 percent, after earlier touching 2.98 percent, the lowest since July 27.

Chinese Economy

China’s stocks climbed for the first time in three days as data showing the nation’s industrial profits fell for a fifth month prompted speculation the authorities would step in to stimulate the economy. China’s central bank added a net 365 billion yuan ($57.8 billion) to the financial system this week as cash demand rises before a week-long holiday, the biggest fund injection in data compiled by Bloomberg going back to 2008.

The MSCI Asia Pacific Index of shares rallied 0.9 percent after earlier falling as much as 0.2 percent. The Shanghai Composite Index added 2.6 percent.

China is Australia’s biggest trading partner and New Zealand’s second-biggest export market.

In New Zealand, ANZ National Bank Ltd. released the results of a survey that showed a net 29.3 percent of companies polled expect their own activity will improve in the next 12 months, up from 26.4 percent in August and the highest level since May.

In Europe, demonstrators gathered near the Spanish parliament in Madrid yesterday, while Greek police dispersed protesters in Athens with tear gas.

Spanish Concern

Spanish bonds dropped yesterday, sending 10-year yields above 6 percent for the first time since Sept. 18. Catalan President Artur Mas called early elections for Nov. 25, as Rajoy struggles to gain acceptance for austerity measures and faces criticism from European leaders for delaying a decision on an international bailout to support the nation’s bond market.

“The Spanish government is going to have their budget and there is a good chance that Greece is going to come back to the fore,” said Joseph Capurso, a strategist at Commonwealth Bank of Australia (CBA) in Sydney. “They might prevent the Aussie from lifting.”

The Australian dollar has weakened 1.3 percent over the past month, according to Bloomberg Correlation-Weighted Indexes that track 10 developed-nation currencies. The New Zealand dollar strengthened 0.7 percent over the same period.

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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