Aussie, Kiwi Gain a 3rd Day Versus Yen on Commodities

The Australia and New Zealand currencies advanced for a third day against the yen as rising commodities prices supported the outlook for exports.

The New Zealand dollar, known as the kiwi, maintained gains against most major counterparts from yesterday after Auckland-based Fonterra Cooperative Group Ltd., the world’s largest dairy exporter, said whole-milk powder prices reached a two-month high. Demand for the South Pacific nations’ currencies was limited before U.S. data forecast to show housing starts hovered around the highest level since 2008, adding to speculation the Federal Reserve will refrain from further stimulus measures.

“Higher commodity prices are lending some support to the Aussie and kiwi,” said Daisaku Ueno, a senior foreign-exchange and fixed-income strategist at Mitsubishi UFJ Morgan Stanley Securities Co. in Tokyo, a unit of Japan’s biggest listed bank. “Good U.S. data are essentially a plus for the growth-related currencies, but no additional stimulus from the Fed as a result may be a disappointment at the same time.”

Australia’s dollar rose 0.1 percent to 83.06 yen at 4:16 p.m. in Sydney from the close yesterday, when it gained 0.5 percent. The Aussie slid 0.3 percent to $1.0477, following a 0.2 percent advance yesterday. The kiwi fetched 80.60 U.S. cents from 80.71, after yesterday climbing from 80.37, the weakest since July 27. It added 0.2 percent to 63.90 yen.

The Thomson Reuters/Jefferies CRB Index of raw materials rose for a second day yesterday, gaining 0.5 percent. The yield on 10-year government notes in Australia climbed today as much as 16 basis points, or 0.16 percentage point, to 3.52 percent, rising above the central bank’s overnight cash-rate target, for the first time since March. The key interest rate is currently held at 3.5 percent.

Milk Prices

Whole-milk powder for October delivery rose 7.3 percent, according to a trade-weighted index on Fonterra’s GlobalDairyTrade website. The near-term contract gained to $2,870 a metric ton, the most since June 19.

U.S. housing starts were at a 756,000 annual pace in July after reaching a 760,000 rate in June, the fastest since October 2008, according to the median estimate of economists in a Bloomberg News survey before today’s report.

Fed Bank of Dallas President Richard Fisher said the U.S. economy probably won’t lapse into recession in 2013 and that new stimulus wouldn’t spur growth. He spoke in a CNBC interview yesterday.

The U.S. central bank has held its target for overnight bank lending in a range of zero to 0.25 percent since 2008 and plans to keep it there at least through late 2014 to stimulate the world’s biggest economy. The Fed also bought $2.3 trillion of mortgage and Treasury debt from 2008 to 2011 in two rounds asset purchases known as quantitative easing, or QE.

Upside Surprise

“If U.S. data continue to surprise to the upside, then the market is likely to scale back expectations of QE, which could result in a risk-off response,” strategists Mary Nicola, Kiran Kowshik, Michael Sneyd and Steven Saywell at BNP Paribas SA wrote in a note to clients yesterday.

In China, Premier Wen Jiabao said easing inflation is allowing room to adjust monetary policy. The Asian nation, Australia’s biggest trading partner and New Zealand’s second-largest export destination, has cut the reserve-requirement ratio for banks three times starting in November and lowered interest rates in June and July.

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