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Aussie Dollar Rises to 6-Week High on China Economy; Bonds Fall

Australia’s dollar advanced to a six-week high after reports showed industrial production and retail sales increased in China, the South Pacific nation’s largest export market.

The Citigroup Economic Surprise Index for China, which shows if economic data beat or missed analysts’ projections, touched a five-month high yesterday. Australian government bonds fell, with the 10-year yield rising toward the most in 17 months after a private report indicated business confidence in the nation surged to the highest since May 2011. New Zealand’s dollar reached a three-week high after a report showed card-spending increased by more than economists estimated.

“The Aussie dollar is reacting positively to data out of China,” said Takuya Kawabata, an analyst at Research Institute Ltd. in Tokyo. “Expectations that China’s economic recovery is underway are building. The Aussie is likely to target the July high” of 93.19 U.S. cents in the short term.

Australia’s dollar rose 0.5 percent to 92.74 U.S. cents at 4:06 p.m. in Sydney from yesterday, after reaching 92.90, the highest level since July 26. The currency gained 0.6 percent to 92.45 yen, after earlier reaching 92.53, the strongest since July 24. It added 0.1 percent to NZ$1.1525.

New Zealand’s dollar climbed 0.4 percent to 80.49 U.S. cents, after earlier touching 80.61, the strongest since Aug. 20. The kiwi dollar advanced 0.5 percent to 80.22 yen.

The yield on Australia’s benchmark 10-year bond gained five basis points, or 0.05 percentage point, to 4.12 percent. It touched 4.16 percent on Sept. 6, the highest since April 2012.

China’s Economy

In China, industrial production increased 10.4 percent in August from a year earlier, the fastest annual rate since March 2012, National Bureau of Statistics data showed today. That exceeded the 9.9 percent increase estimated by economists surveyed by Bloomberg News. Retail sales grew an annual 13.4 percent in August compared with 13.2 percent in July. The median forecast of economists in a Bloomberg poll was 13.3 percent.

National Australia Bank Ltd.’s index of business confidence jumped to a reading of 6 in August from minus 3 the previous month, the bank said today based on a survey of more than 600 companies taken Aug. 20 to Sept. 3. NAB’s business conditions gauge, a measure of hiring, sales and profits, was at minus 6 compared with minus 7 in July.

‘Double Bottom’

Technical indicators are signaling the Aussie has bottomed out and may recover some of its losses this year. The currency may climb toward 93.07 U.S. cents if it can breach key resistance levels after rallying twice last month from about 89 cents, forming a so-called double bottom base, according to Junichi Ishikawa, a Tokyo-based analyst at IG Markets Securities Ltd.

Its 89-day moving average is currently sitting at 93.07 cents. That level crosses the upper end of the cloud on the daily Ichimoku chart, Ishikawa said.

In New Zealand, the value of transactions on electronic cards rose 0.8 percent last month from July, when it gained a revised 0.5 percent, the statistics bureau said in Wellington. That compared with 0.6 percent growth estimated by economists surveyed by Bloomberg.

The Reserve Bank of New Zealand sets policy on Sept. 12. The nation’s two-year swap rate, a fixed payment made to receive a floating rate, rose two basis points to 3.48 percent.

“The RBNZ will certainly be very wary about not to keep rates low for too much longer,” said Derek Mumford, a director at Rochford Capital, a foreign-exchange risk-management company in Sydney. “But I don’t think the current level of economic activity in New Zealand will merit an interest-rate hike at the moment.”

-- Editors: Jonathan Annells, Garfield Reynolds

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