Australia Dollar Gains as Commodities Rise Amid Bets on Stimulus

The Australian dollar touched the highest level in two months versus its U.S. counterpart as commodities climbed amid speculation global central banks will act to spur economic growth.

The Aussie strengthened against the majority of its 16 most-traded peers as a gauge of raw materials rose to the highest level since May and data showed the nation’s home-building approvals surged. New Zealand’s dollar also reached a two-month high versus the greenback.

The gains were largely due to “the rebound in commodity prices you’ve seen over the last couple of sessions, and just in general better sentiment on what’s going on in Europe,” Shane Enright, executive director at Canadian Imperial Bank of Commerce’s CIBC World Markets unit in Toronto, said yesterday in a telephone interview.

Australia’s dollar gained 0.3 percent to $1.0283 yesterday in New York, after touching $1.0297, the strongest since May 3. It rose 0.7 percent to 82.05 yen. New Zealand’s currency, known as the kiwi, was little changed at 80.38 U.S. cents. It climbed 0.3 percent earlier to 80.62 cents, also the most since May 3. The kiwi advanced 0.3 percent to 64.12 yen.

The Aussie pared gains after the Reserve Bank of Australia kept its benchmark interest rate at 3.5 percent and said a subdued international outlook means the stance of monetary policy remains appropriate. It rose later to the high of the day as risk appetite swelled.

Commodities Gain

The Standard & Poor’s GSCI Spot Index of 24 raw materials rallied as much as 3.5 percent to 618.42, the highest level since May 29. Stocks rose, with the Standard & Poor’s 500 Index gaining 0.6 percent, amid speculation that central banks in the U.S., Europe and China will ease monetary policy to spur their economies, boosting demand for raw materials. Australia and New Zealand export commodities.

The number of permits granted to build or renovate houses and apartments in Australia jumped by a record 27.3 percent in May from April, when they declined a revised 7.6 percent, the Bureau of Statistics said yesterday in Sydney.

Morgan Stanley cut its forecasts for the Australian, New Zealand and Canadian dollars yesterday, citing what it called an increasingly challenging global economic environment for the commodity-exporting countries.

New Forecasts

The Aussie will depreciate to 95 U.S. cents by year-end, compared with the previous projection of 99 cents, New York-based Morgan Stanley said in a note. New Zealand’s dollar will finish the year at 75 U.S. cents, compared with the earlier forecast of 80 cents, and the Canadian dollar will weaken to C$1.06 against its U.S. counterpart, versus the previous forecast of C$1.03, the firm said.

“Investors really question the sustainability of the rise in not only commodities, but currencies that are closely correlated with resource-linked assets, that’s just on broader concerns about the slowing global economy,” Joe Manimbo, a Washington-based market analyst at Western Union Business Solutions, a unit of Western Union Co, said in a telephone interview yesterday.