The Australian and New Zealand dollars rose versus the yen for a second day as gains in stocks and commodities boosted demand for higher-yielding assets.
Australia’s government bonds declined, with the three-year yield rising from a 11-week low. The New Zealand dollar declined against the U.S. currency after the annual inflation rate held below the Reserve Bank of New Zealand’s target range for a third quarter. Losses for the so-called kiwi were limited after Auckland-based Fonterra Cooperative Group Ltd., the world’s largest dairy exporter, said whole milk powder prices rose.
“Commodity currencies in general have recovered since we haven’t had further significant selling of gold, and commodity prices have performed a little bit better,” said Ray Attrill, Sydney based global co-head of currency strategy at National Australia Bank Ltd. Inflation data were “pretty much bang in line with expectations. There was an initial attempt to try and sell the New Zealand dollar but it didn’t get very far.”
Australia’s dollar advanced 0.6 percent to 101.90 yen as of 5:05 p.m. in Sydney from yesterday, when it jumped 1.5 percent. It declined 0.3 percent to $1.0362 from yesterday, when it gained 0.8 percent. The New Zealand dollar strengthened 0.6 percent to 83.35 yen from yesterday, when it climbed 1.8 percent. The kiwi lost 0.2 percent to 84.74 U.S. cents.
Three-year yields in Australia rose three basis points, or 0.03 percentage point, to 2.77 percent from yesterday, when they touched 2.68 percent, a level unseen since Jan. 24. Ten-year yields were little changed at 3.26 percent.
The MSCI Asia Pacific Index gained 0.7 percent after Thomson Reuters/Jefferies CRB index of raw materials climbed 0.8 percent yesterday, its first advance in five days.
Whole milk powder for June delivery rose 4.4 percent to a record $6,283 a metric ton, according to Fonterra’s GlobalDairyTrade website.
The kiwi dollar remains “a sought-after diversification tool for domestic and global investors,” Annette Beacher, head of Asia-Pacific research for TD Securities Inc. in Singapore, wrote in a report to clients today. “Soaring house and dairy prices provide considerable upside to the outlook for growth and inflation.”
Consumer prices increased 0.9 percent from a year earlier, Statistics New Zealand said in Wellington today, matching the median estimate in a Bloomberg News survey and the forecast from the Reserve Bank of New Zealand.
The central bank targets annual price gains of 1 percent to 3 percent. RBNZ Governor Graeme Wheeler last month said he expected to leave borrowing costs unchanged at 2.5 percent this year because of the effects of a drought and the strong currency on growth.
New Zealand’s two-year swap rate, a fixed payment made to receive a floating rate, was little changed at 2.87 percent. The Reserve Bank of New Zealand will meet on April 24.
In Australia, consumer prices probably rose 2.8 percent in the first quarter from a year earlier, according to the median estimate of economists surveyed by Bloomberg before the Bureau of Statistics releases the data on April 24.
“If we have a very weak CPI print, that could bring RBA easing back onto the table,” said National Australia Bank’s Attrill, referring to the Reserve Bank of Australia. “New Zealand’s CPI number doesn’t give us any reason to think we should be changing our expectation for the Australian CPI next week.”