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Aussie Set for Best Week in a Month on U.S. Stimulus, China Bets

Australia’s dollar was set for its biggest weekly advance in more than a month amid expectations the U.S. will delay reductions in monetary stimulus and ahead of economic growth data from China.

The Aussie reached a four-month high yesterday as Federal Reserve Bank of Chicago President Charles Evans said the central bank shouldn’t start to slow asset purchases, which have helped prop up global asset prices. China, Australia’s biggest export market, is forecast to say today that gross domestic product growth accelerated in the third quarter. New Zealand’s dollar snapped a five-day gain as a technical indicator signaled the currency had risen too rapidly.

“One thing that has been supporting the Aussie is the yield advantage over the U.S. dollar,” said David de Ferranti, a Sydney-based market analyst at FXCM Inc. (FXCM) “We are seeing a turnaround for the Chinese economy, and that bodes well for the Australian dollar.”

The Aussie declined 0.1 percent to 96.24 U.S. cents as of 11:27 a.m. in Sydney, trimming its weekly advance to 1.7 percent, the most since the period ended Sept. 6. It touched 96.47 yesterday, the most since June 14. New Zealand’s currency retreated 0.2 percent to 84.71 U.S. cents, paring its weekly advance to 1.8 percent.

Evans, a voting member of the Federal Open Market Committee this year, said the central bank should put off reductions in stimulus because of disruptions in economic data caused by a U.S. government shutdown that ended just yesterday.

“Only the data can tell us how much progress we’ve made and they aren’t saying much right now,” he said yesterday in a speech prepared for delivery in Madison, Wisconsin. The Fed should continue the $85 billion of monthly bond buying until data confirm whether the economy has improved sufficiently, the regional Fed chief said.

China’s Bureau of Statistics is likely to say today that GDP expanded 7.8 percent in the July-September period from a year earlier, according to the median estimate of economists surveyed by Bloomberg News. The economy expanded 7.5 percent in the second quarter.

Yields on Australia’s three-year government note declined two basis points, or 0.02 percentage point, to 3.05 percent. They climbed to 3.21 percent on Oct. 16, a level unseen since April 2012.

To contact the reporter on this story: Masaki Kondo in Singapore at mkondo3@bloomberg.net

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

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