The Australian and New Zealand dollars held gains from yesterday as rallies in stocks and commodity prices boosted demand for higher-yielding assets.
Australia’s government bonds declined, with the three-year yield rising from a 11-week low. New Zealand’s dollar climbed against most major counterparts after Auckland-based Fonterra Cooperative Group Ltd., the world’s largest dairy exporter, said whole milk powder prices rose. The so-called kiwi briefly declined after the annual inflation rate held below the Reserve Bank of New Zealand’s target range for a third quarter.
“Commodity currencies in general have recovered since we haven’t had further significant selling of gold, and commodity prices have performed a little bit better,” said Ray Attrill, Sydney based global co-head of currency strategy at National Australia Bank Ltd. New Zealand’s consumer price data was “pretty much bang in line with expectations. There was an initial attempt to try and sell the New Zealand dollar but it didn’t get very far.”
The Aussie traded at $1.0381 as of 10:15 a.m. in Sydney from $1.0390 yesterday, when it gained 0.8 percent. The currency advanced to 101.47 yen from 101.34. The New Zealand dollar was little changed at 84.90 U.S. cents after earlier falling as much as 0.3 percent. It strengthened 1 percent yesterday. The so- called kiwi gained 0.2 percent to 82.98 yen.
Australia’s government bonds fell, pushing three-year yields up three basis points, or 0.03 percentage point to 2.77 percent from yesterday, when they touched 2.68 percent, a level unseen since Jan. 24. Ten-year yields rose one basis point to 3.27 percent.
The MSCI World Index gained 0.5 percent yesterday, while Thomson Reuters/Jefferies CRB index of raw materials climbed 0.8 percent, its first advance in five days.
Whole milk powder for June delivery rose 4.4 percent to a record $6,283 a metric ton, according to Fonterra’s GlobalDairyTrade website.
In New Zealand, consumer prices increased 0.9 percent from a year earlier, Statistics New Zealand said in Wellington today, matching the median estimate in a Bloomberg News survey and the forecast from the Reserve Bank of New Zealand.
The central bank targets annual price gains of 1 percent to 3 percent. RBNZ Governor Graeme Wheeler last month said he expected to leave borrowing costs unchanged at 2.5 percent this year because of the effects of a drought and the strong currency on growth.
New Zealand’s two-year swap rate, a fixed payment made to receive a floating rate, was little changed at 2.87 percent. The Reserve Bank of New Zealand will meet on April 24.
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