Feb. 28 (Bloomberg) -- The Australian dollar reached a one-week high against its U.S. counterpart before the European Central Bank begins its longer-term refinancing operation today to help shore up the region’s banks.
The Aussie advanced as global stocks rose, supporting demand for higher-yielding assets. New Zealand’s currency, nicknamed the kiwi, pared earlier losses.
“Wait for the LTRO and the boost to risk markets and use that as an opportunity to sell into strength,” said Robert Rennie, chief currency strategist at Westpac Banking Corp. in Sydney. “Dips in the Aussie back to the $1.06 to 1.0650 level are being well-supported. The buyers are out there looking for opportunities to buy.”
Australia’s dollar rose 0.1 percent to $1.0767 at 11:38 a.m. in New York after earlier climbing to $1.0787, the strongest since Feb. 20. The Aussie was little changed at 86.67 yen after earlier losing as much as 0.7 percent. New Zealand’s currency fell 0.4 percent to 83.74 U.S. cents after earlier dropping as much as 0.7 percent. The kiwi decreased 0.5 percent to 67.45 yen.
The MSCI World Index of equities rose 0.5 percent and the Standard & Poor’s 500 Index added 0.4 percent.
Europe’s central bank will call for bids today in the tender of unlimited three-year funds and will announce the allotment amount tomorrow. Financial institutions may ask the ECB for 470 billion euros ($632 billion) in funds, according to the median estimate in a Bloomberg News survey.
Purchasing power parity, a measure of relative consumer prices across countries, shows the Aussie is trading 35 percent above fair value against the U.S. dollar. The kiwi is 31 percent overvalued versus the greenback.
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