The Australian dollar retreated from a one-month high before China announces data on new loans and as Federal Reserve officials remain confident the U.S. economy can withstand a tapering of stimulus.
New Zealand’s currency extended a gain from yesterday versus the Aussie after reports showed business confidence surged to an almost 20-year high while home prices rose the most in six years in the smaller nation. Demand for Australia’s currency may be tempered before a Jan. 16 report forecast to show the country’s unemployment rate held at a four-year high.
“The balance of factors is still more to the downside for the Aussie than the upside,” said Stan Shamu, a Melbourne-based market strategist at IG Ltd. “If we see any disappointment on the China or Australia data front then we’d expect to see the Aussie come off a little, as well as if Fed members remain quite bullish on the U.S. economy.”
Australia’s dollar fell 0.2 percent to 90.39 U.S. cents as of 4:53 p.m. in Sydney after yesterday touching 90.86, the highest level since Dec. 11. It gained 0.1 percent to 93.35 yen and traded at NZ$1.0778 following a 0.3 percent drop to NZ$1.0807 yesterday. The kiwi fetched 83.86 U.S. cents from 83.77. It rose 0.4 percent to 86.62 yen.
China, the main trading partner for both South Pacific nations, will probably say this week that new loans dropped to 570 billion yuan in December from 624.6 yuan the previous month.
Federal Reserve Bank of Atlanta President Dennis Lockhart said yesterday weak payroll growth last month shouldn’t discourage policy makers from reducing monthly bond purchases as long as the economy continues to gain strength. Charles Plosser from the Philadelphia Fed and Richard Fisher from Dallas, voting members of the Federal Open Market Committee this year, speak today.
New Zealand’s currency rose versus the yen as reports pointing to an upswing in economic activity added to signs the central bank will need to raise rates this quarter.
A gauge of business confidence climbed in the three months through December to the highest since the second quarter of 1994, the New Zealand Institute of Economic Research Inc. said today. House prices jumped 10 percent in December from a year ago, the fastest annual increase since 2007, Quotable Value New Zealand said.
Twelve of 15 economists surveyed by Bloomberg expect Reserve Bank Governor Graeme Wheeler to increase borrowing costs from a record-low 2.5 percent by March. Swaps traders are wagering on 1.16 percentage points of increases over 12 months, a Credit Suisse Group AG index shows.
New Zealand’s two-year swap rate, a fixed payment exchanged for floating rates, was little changed at 3.81 percent. Australia’s three-year bond yield fell two basis points, or 0.02 percentage point, to 2.96 percent, while the 10-year rate declined three basis points to 4.20 percent.