Australia’s dollar climbed to a one-week high after the central bank left interest rates unchanged at a record low and omitted mention of further scope to ease monetary policy.
The Aussie earlier pared an advance after reports showed retail sales grew less than predicted and the nation’s current-account deficit was wider than estimated. The Reserve Bank of Australia kept borrowing costs at 2.5 percent, in line with the forecasts of all 32 economists in a Bloomberg News survey. New Zealand’s dollar gained as private data showed the country’s commodity export prices rose.
“The main surprise was that the RBA didn’t reinsert the definitive easing bias into this statement after stressing it in the minutes of their August meeting,” said Richard Grace, the Sydney-based chief currency strategist and head of international economics at Commonwealth Bank of Australia. “The Aussie may rally a little as a result.”
The Aussie rose 0.6 percent to 90.30 U.S. cents at 4:34 p.m. in Sydney, after climbing 0.9 percent yesterday. It touched 90.48, the most since Aug. 26. The currency gained 0.9 percent to 89.94 yen after reaching 90.06, the most since Aug. 19. The kiwi rose 0.2 percent to 78.27 U.S. cents after jumping 1.1 percent yesterday. It was up 0.5 percent to 77.95 yen.
The MSCI Asia Pacific Index of stocks gained 1.4 percent and the Shanghai Composite Index of Chinese equities added 1 percent as Goldman Sachs Group Inc. boosted its forecast for the nation’s expansion in 2013. Australia sells more than 70 percent of its merchandise exports to Asia, led by China.
“The Board will continue to assess the outlook and adjust policy as needed to foster sustainable growth in demand and inflation outcomes consistent with the target,” RBA Governor Glenn Stevens said in a statement accompanying today’s decision.
The RBA has lowered rates by 2.25 percentage points since November 2011. Swaps traders are predicting a 57 percent chance that policy makers will lower borrowing costs again by March, data compiled by Bloomberg show.
“The Aussie is rallying due to a small language change, as the market sees the removal of the scope line as a signal that they are done,” said Matthew Johnson, a Sydney-based interest-rate strategist at UBS AG. “It’s ironic as a higher Aussie dollar makes a cut more likely.”
Retail sales climbed 0.1 percent in July, compared with the median forecast for a 0.4 percent gain in a Bloomberg survey of economists. A separate report showed the current-account deficit widened to A$9.4 billion ($8.5 billion) in the second quarter, more than the A$8.5 billion that economists had predicted.
Foreign ownership of Australian government securities rose last quarter to 69.1 percent from 68.3 percent in the first three months of the year, according to statistics bureau data today. International investors made net purchases of A$1.9 billion in long-term debt and reduced holdings of bills.
Australia’s 10-year bond yield rose four basis points to 3.99 percent today while the three-year rate climbed six basis points to 2.81 percent. A basis point is 0.01 percentage point.
The New Zealand dollar gained versus 13 of its 16 most traded peers as ANZ Bank New Zealand Ltd. said commodity export prices rose 0.7 percent in August after a 0.6 percent gain the previous month. The nation’s two-year swap rate, a fixed payment made to receive floating rates, rose one basis point to 3.46 percent.
Australia’s benchmark 10-year government bond yield climbed for a second day, adding four basis points to 3.99 percent.