The Australian dollar touched its strongest level in more than two years against the greenback as speculation the Federal Reserve will expand stimulus measures boosted demand for higher-yielding assets.
The Aussie, as the currency is nicknamed, was the best performer this quarter among its 16 most-traded counterparts versus the U.S. currency as swaps indicate a 66 percent chance the central bank will increase interest rates next week. New Zealand’s dollar headed for a monthly gain as speculators increased wagers to the most this year that the currency will strengthen.
“It’s still a risk-on story that you’re looking for, and any data that signals the world is doing better will help propel the Aussie higher,” said Tony Allen, head of currency trading in Wellington at ANZ National Bank Ltd., New Zealand’s biggest lender. “A continuation of U.S. dollar weakness sentiment” is likely, he said.
Australia’s dollar rose 0.3 percent to 96.25 U.S. cents at 11:59 a.m. in New York from 95.92 cents Sept. 24, after earlier climbing to 96.34 cents, the strongest since July 2008. The currency has gained 13 percent this quarter and 7 percent since the start of the year. The Aussie bought 81.01 yen from 80.77 yen.
New Zealand’s dollar bought 73.48 cents from 73.40 cents, set for a 5 percent gain in September. The so-called kiwi bought 61.86 yen from 61.82 yen.
Fed Chairman Ben S. Bernanke and fellow policy makers hinted last week they are willing to embark on another round of so-called quantitative easing asset purchases to spur growth and support prices.
“The positioning data point to larger U.S. dollar short positions, with investors favoring the commodity currencies,” Barclays Capital analysts including Singapore-based David Forrester wrote in a note to clients. “By historical standards, only the Australian dollar positioning is approaching extreme levels.”
Short positions are bets a currency will decline.