Aussi, Kiwi Rally From ’12 Lows on Bets Losses Excessive

The Australian and New Zealand dollars rebounded on speculation their declines to the lowest levels this year were excessive.

The so-called kiwi gained against all of its major peers after data showed New Zealand’s trade surplus rose in April. Demand for the South Pacific currencies was limited after Chancellor Angela Merkel said following a European Union summit that Germany stands by its opposition to jointly issued common bonds, deepening concern Europe’s debt crisis will worsen.

“The markets have been excessively pessimistic,” said Kengo Suzuki, a foreign-exchange strategist in Tokyo at Mizuho Securities Co., a unit of Japan’s third-largest bank by market value. “We’re seeing some buying back in the Aussie and kiwi because they’ve been falling too rapidly.”

Australia’s dollar added 0.2 percent to 97.62 U.S. cents as of 3:38 p.m. in Sydney from the close in New York yesterday, when it touched 96.90, the weakest since Nov. 25. It rallied 0.2 percent to 77.61 yen. New Zealand’s currency gained 0.4 percent to 75.26 U.S. cents, after sliding to 74.57 yesterday, the weakest since Nov. 28. The kiwi bought 59.83 yen, 0.4 percent stronger than yesterday’s close.

The Australian dollar’s 14-day relative strength index against its U.S. counterpart was at 26 today, below the 30 level that signals to some traders an asset’s price may rebound. The gauge for the kiwi was at 25.

New Zealand’s exports exceeded imports by NZ$355 million ($267 million), from a revised NZ$186 million in March, the statistics office said today in Wellington.

New Zealand’s Budget

Separately, the government said it projected a narrower budget surplus in 2015. The operating surplus will be NZ$197 million in the year through June 2015, compared with a previously forecast NZ$370 million, Finance Minister Bill English said in a fiscal plan released today in Wellington. The budget balance will improve from a NZ$8.44 billion deficit this year as the government curbs new spending and sells assets to limit debt.

Prime Minister John Key’s government forecasts the nation’s gross domestic product will grow by 3.4 percent in the fiscal year to March 2014.

In China, a private survey showed the nation’s manufacturing may shrink for a seventh month in May, adding to bets that the government will take further steps to spur growth.

The 48.7 preliminary reading for a purchasing managers’ index released by HSBC Holdings Plc and Markit Economics today compares with a final 49.3 for April. If confirmed on June 1, it would mark the longest run of below-50 readings since the global financial crisis.

China is Australia’s biggest trading partner and New Zealand’s second-largest export destination.

‘Aggressive Policy Easing’

“We now expect more aggressive policy easing from Beijing,” such as lowering reserve ratios, cutting interest rates and increasing fiscal stimulus, said Khoon Goh, a Sigapore-based senior foreign-exchange strategist at Australia & New Zealand Banking Group Ltd. “We could see the second quarter being the bottom if they do all those things,” supporting the Aussie and kiwi, he said.

Australia’s bonds rallied, pushing the yield on the 10-year note down by one basis point, or 0.01 percentage point, to 3.15 percent. It touched 3.058 percent on May 18, the lowest in data compiled by Bloomberg going back to 1969.

New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, was unchanged at 2.385 percent.

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