Aussie Dollar Rises After Business Investment Climbs; Kiwi Gains

Australia’s dollar rose, rebounding from its lowest level in three weeks, after a report today showed business investment climbed in the second quarter.

The Aussie gained versus most of its 16 major counterparts after the statistics bureau said Australian companies boosted their estimated investment in the year through June 2014 to A$159.2 billion ($143 billion), up 2.3 percent from three months earlier. Australia’s currency headed for a fifth-straight monthly drop as volatility climbed to a six-week high. New Zealand’s kiwi dollar advanced as Asian stocks rose.

The investment figure “was stronger than expected,” said Callum Henderson, the global head of currencies research at Standard Chartered Plc in Singapore. “It should be a mild positive for the Aussie,” said Henderson, who sees the currency dropping to 88 U.S. cents by Dec. 31.

The Aussie dollar added 0.2 percent to 89.57 U.S. cents as of 4:48 p.m. in Sydney after sliding as much as 1 percent yesterday to 88.93 cents, the weakest since Aug. 5. New Zealand’s currency gained 0.3 percent to 78.19 U.S. cents from yesterday, when it touched 77.44 cents, the least since Aug. 5.

Australia’s 10-year government bond yield was little changed at 3.91 percent, halting a four-day decline. The rate on three-year notes gained one basis point to 2.72 percent.

The MSCI Asia Pacific Index of shares rose 0.5 percent.

Australian companies’ forecast for spending in the year ended June 30, 2013, was A$160.5 billion, 1.4 percent lower than previous estimates, according to figures released today.

More Cuts

Interest-rate swaps data compiled by Bloomberg show traders see a 91 percent chance Reserve Bank of Australia officials will the nation’s keep benchmark borrowing cost at a record-low 2.5 percent when they next meet on Sept. 3. There’s a 61 percent probability policy makers will cut the rate to 2.25 percent or less by their Dec. 3 gathering, according to the figures.

Today’s report “does not change our view that capital expenditure will be a drag on growth in coming quarters and we do not change our expectations that the RBA will likely cut rates by another 25 basis points at its November meeting,” Martin Whetton, an interest-rate strategist at Nomura Holdings Inc. in Sydney, wrote in an e-mailed note to clients today.

Sales of new homes in Australia declined 4.7 percent last month, the first drop since February, a report from the Housing Industry Association showed today.

The Aussie has fallen 0.3 percent since July 31, set for fifth-straight monthly decline, the longest losing streak since the period through November 2008. New Zealand’s kiwi dollar has fallen 2.1 percent this month.

Volatility on one-month Australian dollar options was at 13.02 percent today after rising to 13.32 percent yesterday, the highest since July 15.

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