Australian Dollar Touches 3-Week High Before China Report

Australia’s dollar touched a three-week high before a report tomorrow that may show a gain in imports by China, the nation’s biggest trading partner.

The Aussie gained versus most of its 16 major counterparts this week as U.S. President Barack Obama and Republican lawmakers continued discussions on increasing the nation’s debt limit and ending a partial government shutdown. The kiwi dollar rebounded as Asian stocks headed for their biggest one-day gain in three weeks and before a report that may show New Zealand’s inflation accelerated to a 1 1/2-year high.

“The momentum has picked up and a lot of the fears have waned over Chinese growth,” said Sean Callow, a senior currency strategist at Westpac Banking Corp. in Sydney. “There’s no doubt that’s been one of the reasons the Aussie dollar has been more resilient than in the past.”

The Australian dollar gained 0.2 percent to 94.70 U.S. cents as of 4:40 p.m. in Sydney after earlier touching 94.85, the strongest since Sept. 19. It has risen 0.4 percent since Oct. 4. New Zealand’s currency climbed 0.3 percent to 83.08 U.S. cents after falling 0.3 percent yesterday. It’s weakened 0.1 percent this week.

Australia’s 10-year yield was down three basis points to 4.13 percent from yesterday, when it offered 148 basis points more than similar-maturity U.S. Treasuries, the most since June 24. The yield on the the South Pacific nation’s three-year debt declined two basis points to 3.10 percent.

Chinese imports probably rose 7 percent in September from a year earlier after increasing by the same amount the previous month, according to the median estimate of economists surveyed by Bloomberg News before tomorrow’s report. Exports climbed 5.5 percent after a 7.2 percent advance in August, analysts projected.

Best Performer

Bloomberg Correlation-Weighted Indexes show the Aussie was the best performer in the past week, rising 0.9 percent against a basket of nine other developed-nation currencies tracked by the gauges. The kiwi gained 0.4 percent.

In the U.S., Obama didn’t accept or reject House Republicans’ plan to increase the debt limit as the two sides pledged to continue talks. The government of the world’s biggest economy will run out of borrowing authority on Oct. 17.

The MSCI Asia Pacific Index of shares climbed 1.1 percent, poised for the largest advance since Sept. 19.

New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, rose one basis point to 3.52 percent, set for a closing level unseen since Sept. 17.

Inflation Gain

Statistics New Zealand may say the nation’s consumer price index climbed 1.2 percent in the third quarter from a year earlier, according to the median estimate of economists surveyed by Bloomberg News before the Oct. 16 release. If confirmed, that would be the fastest pace since the three months through March 2012.

Interest-rate swaps data compiled by Bloomberg show traders see a 77 percent chance the Reserve Bank of New Zealand will raise borrowing costs from a record-low 2.5 percent to 2.75 percent or higher by April.

“Risks for the New Zealand dollar stemming from the CPI are probably weighted to the upside,” Citigroup Inc. analysts including Richard Cochinos, head of Americas Group of 10 foreign-exchange strategy, wrote in an e-mailed note to clients today. “A stronger-than-expected reading would point to somewhat less scope for RBNZ patience in raising interest rates.”

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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