Australian Dollar Rises on Asian Stock Gains; Kiwi Climbs

The Australian dollar advanced versus most of its 16 major counterparts as a gain in Asian stocks boosted demand for higher yielding assets.

The so-called Aussie rose versus the dollar and yen after Federal Reserve Bank of Chicago President Charles Evans said the U.S. central bank should keep policy accommodative to support the world’s biggest economy. New Zealand’s dollar, known as the kiwi, climbed against all of its major peers after a report today showed an advance in retail card spending.

“I think this week you might get a break upwards in the Aussie,” said Joseph Capurso, a currency strategist in Sydney at Commonwealth Bank of Australia (CBA), the nation’s largest lender. “Sentiment is certainly improving.”

The Australian dollar rose 0.2 percent to $1.0557 as of 4:45 p.m. in Sydney. It gained 0.6 percent to 94.55 yen. New Zealand’s currency advanced 0.5 percent to 84.02 U.S. cents and climbed 0.9 percent to 75.25 yen.

The MSCI Asia Pacific Excluding Japan Index (MXAPJ) increased 0.3 percent, while futures on the Standard & Poor’s 500 Index added 0.1 percent. Japan’s financial markets are shut today for a holiday.

The U.S. government should put in place “policies that slowly but surely bring the prospects of future revenues into balance with future spending,” Chicago Fed President Evans said in remarks in Hong Kong today. “Under this scenario, monetary policy has an important contribution to make.”

Fed officials said last month they would expand the bank’s bond-purchasing program, a move that tends to debase the greenback, and link policy to economic indicators for the first time.

‘Patchy’ Recovery

Australia’s dollar slid versus its New Zealand counterpart after reports today in the larger nationshowed an unexpected decline in home-loan approvals and a decrease in job advertisements.

“Today’s data is further confirmation that the recovery in the Australian housing market is still patchy at best,” said Jonathan Cavenagh, a foreign-exchange strategist at Westpac Banking Corp. in Singapore. “That means further rate cuts, in our view. That could certainly weaken the Aussie dollar on a cross basis.”

Statistics New Zealand said today the value of retail transactions on electronic cards increased 0.3 percent in December, the third-straight monthly advance.

The Aussie dollar fell 0.2 percent to NZ$1.2567.

Interest-rate swaps data compiled by Bloomberg show traders see a 78 percent chance Reserve Bank of Australia Governor Glenn Stevens will decrease his country’s key rate to a record 2.75 percent or lower after the policy meeting on June 4. There’s an 80 percent probability New Zealand’s benchmark borrowing cost will be unchanged at 2.5 percent after the central bank meeting later that month.

Australia’s 10-year bond rose, pushing the yield down one basis point, or 0.01 percentage point, to 3.46 percent. New Zealand’s two-year swap rate, a fixed payment made to receive floating rates which is sensitive to interest-rate expectations, was little changed at 2.80 percent.

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

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