The Australian and New Zealand dollars gained against all of their most-traded counterparts as risk appetite increased amid speculation the Federal Reserve will buy bonds to boost the U.S. economy.
The two South Pacific nations’ currencies strengthened against the greenback after Moody’s Investors Service said the U.S.’s Aaa rating may be cut if it doesn’t reduce its ratio of debt to gross domestic product. New Zealand’s dollar advanced as Fitch Ratings affirmed the country’s AA status, citing its strong governance and business environment.
The Aussie has been “supported by a general improvement in risk aversion,” Camilla Sutton, chief currency strategist at Bank of Nova Scotia’s Scotiabank unit in Toronto, wrote yesterday in a note to clients. “The catalyst for the New Zealand dollar rally is the improvement in risk sentiment and Fitch affirmation of New Zealand’s AA rating with a stable outlook.”
Australia’s currency appreciated 1 percent to $1.0434 yesterday in New York after earlier rising as much as 1.1 percent to $1.0449, its highest level since Aug. 23. It rose 0.3 percent to 81.15 yen.
New Zealand’s dollar, nicknamed the kiwi, gained 1.1 percent to 81.74 U.S. cents after reaching 81.95 cents, its highest level since Aug. 7. The kiwi strengthened 0.4 percent to 63.56 yen.
The Fed opens a two-day policy meeting today.
BNP Paribas SA added bet the U.S. dollar will depreciate versus its New Zealand counterpart. The greenback will weaken to 84.70 cents against kiwi, Kiran Kowshik and Steven Saywell, London-based currency strategists at the firm, wrote yesterday in a note to clients. BNP Paribas placed a stop for the trade at 79.65. A stop order is automatically triggered at a set price level.
The kiwi-dollar cross trade is “due for a catch-up with the performance of broader equity markets,” they wrote. “Of the commodity currencies, the New Zealand dollar stands out as being under-owned from a positioning perspective.”
The Standard & Poor’s GSCI Index of 24 raw materials advanced 0.5 percent, and the S&P 500 Index rose 0.3 percent.