Aussie Holds This Year’s Gain on Chinese Manufacturing

The Australian dollar held an advance this year as a private gauge showed manufacturing expanded more than economists forecast in China, the South Pacific nation’s biggest trading partner.

The so-called Aussie and its New Zealand counterpart climbed versus most of their major peers before data this week that analysts say will indicate an expansion in U.S. factory output. Senate Majority Leader Harry Reid said the chamber will resume a session today in an attempt to avoid more than $600 billion in tax increases and federal spending cuts set to start taking effect in January in the world’s biggest economy.

“The global backdrop paints a relatively favorable picture for the Aussie dollar,” said Gavin Stacey, the chief interest- rate strategist in Sydney at Barclays Plc. “It’s hard to envisage a selloff for the Aussie when the global manufacturing backdrop is in an improving mode.”

The Australian dollar added 0.1 percent to $1.0385 as of 4:38 p.m. in Sydney and climbed 0.4 percent to 89.44 yen. New Zealand’s currency, also known as the kiwi, advanced 0.4 percent to 82.33 U.S. cents and increased 0.7 percent to 70.92 yen. The Aussie has risen 1.7 percent against the U.S. dollar this year, while its New Zealand peer added 5.9 percent.

Australia’s 10-year bond yield fell five basis points to 3.27 percent after earlier touching 3.23 percent, the least since Dec. 12. New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, declined 2 1/2 basis points to 2.67 percent.

Manufacturing Gains

The final reading for a Chinese manufacturing gauge by HSBC Holdings Plc and Markit Economics showed the index was at 51.5 this month. That compares with a preliminary 50.9 figure published on Dec. 14 and 50.5 in November. A reading above 50 indicates expansion. A separate government-backed gauge probably rose to 51 in December from 50.6 last month, analysts estimated before the data is published tomorrow.

Economists predict the Institute for Supply Management will say its manufacturing index for the U.S. rose to 50.3 this month from 49.5 in November, according to a separate Bloomberg poll before the Jan. 2 release.

Senator Reid said there are still “significant differences between the two sides, but negotiations continue,” referring to budget talks among U.S. lawmakers. The Senate will resume its session today at 11 a.m. Washington time, according to Reid, a Democrat from Nevada.

The difference in the number of wagers on a rise in the Australian dollar compared with those on a decline -- so-called net longs -- dropped to 75,433 last week, figures from the Washington-based Commodity Futures Trading Commission showed. That compares with a record 103,376 in the week through Dec. 11.

Bets for a gain in New Zealand’s currency were at 14,739 over the same period, after rising to a five-year high of 24,600 in the week ended Dec. 11, according to the data.

To contact the reporter on this story: Kristine Aquino in Singapore at kaquino1@bloomberg.net

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

Bloomberg reserves the right to edit or 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.