Aussie Gains on Better-Than-Expected Retail, Trade Data

Australia’s dollar strengthened after a report today showed gains in retail sales in September exceeded economist estimates while the nation’s trade deficit was smaller than expected.

The so-called Aussie rose versus all 16 major peers before Reserve Bank of Australia officials hold a policy meeting tomorrow. Demand for Australia’s currency and its New Zealand counterpart was tempered as investors curbed bids on higher-yielding assets before the U.S. presidential election this week.

“Today’s data was a little bit better than expected, and the Aussie might see a modest boost here,” said Joseph Capurso, a currency strategist in Sydney at Commonwealth Bank of Australia, the nation’s largest lender. “It’s not going to change the picture greatly for the risk of an RBA rate cut tomorrow. But we also acknowledge that it’s going to be a very close call.”

Australia’s dollar climbed 0.3 percent to $1.0367 as of 5:13 p.m. in Sydney. The currency gained 0.3 percent to 83.34 yen. Its New Zealand peer was at 82.62 U.S. cents after dropping 0.2 percent to 82.52 on Nov. 2. The kiwi bought 66.42 yen from 66.36 at the end of last week.

CBA predicts policy makers will cut borrowing costs by 25 basis points, or 0.25 percentage point, to 3 percent tomorrow, Capurso said.

The yield on Australia’s 10-year note fell two basis points to 3.16 percent. New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, was little changed at 2.69 percent.

Retail, Trade

Australian retail sales climbed 0.5 percent in September from the previous month, the statistics bureau said in a report today. The median prediction in a Bloomberg News survey of economists was a 0.4 percent gain. The trade deficit was A$1.46 billion ($1.51 billion) in the same period from a revised A$1.88 billion in August, according to a separate release. Forecasters projected a A$1.55 billion shortfall.

Interest-rate swaps data compiled by Bloomberg indicate traders see a 54 percent chance RBA Governor Glenn Stevens will lower the overnight cash rate target by 25 basis points tomorrow. That compares with a 64 percent probability seen on Oct. 29, the data show. Twenty of 27 economists in a Bloomberg survey forecast a quarter-percentage point reduction.

Net Longs

The difference in the number of wagers by hedge funds and other large speculators on a rise in the Australian dollar compared with those on a decline -- so-called net longs -- was at 52,090 on Oct. 30, figures from the Washington-based Commodity Futures Trading Commission showed. That compares with a 1 1/2-year high of 89,562 in the period ended Sept. 25. Net long positions for New Zealand’s currency were at 16,745 in the same period from 16,349 a week earlier, the data show.

The Aussie dropped 3.7 percent in the past three months, the worst performance after the yen among the 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The kiwi fell 0.6 percent.

Americans are set to choose a leader amid growing debt levels and the approaching fiscal cliff, as the more-than $600 billion of federal spending cuts and tax increases that will take effect at the start of next year unless Congress acts is known. Voters tomorrow will choose which of President Barack Obama and challenger Mitt Romney will steer the economy over the next four years.

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