Aussie Gains After Losing Quarter as China Boosts Sentiment

  • Commodity-producing nation's currencies advance versus dollar
  • Chinese manufacturing gauge climbs from three-year low

After a quarter that saw Australia’s dollar plummet the most among its Group-of-10 peers amid slumping commodity prices and concern that China’s economy was slowing, October began on a more positive note for higher-yielding currencies.

The Aussie gained alongside the currencies of commodity-producing nations as global stocks continued their recovery from a rout that wiped out about $10 trillion. The yen fell versus most of its 16 major peers Thursday as signs of improvement in Chinese manufacturing damped demand for safety and a former Bank of Japan deputy governor said additional monetary stimulus is likely.

“People are a little happier today because of the data and you take what you can,” said Neil Mellor, a senior foreign-exchange strategist at Bank of New York Mellon Corp. in London. “Ultimately people are still uncertain as to where we stand with interest rates, where China and its economic outlook stands.”

Australia’s dollar strengthened 0.7 percent to 70.66 U.S. cents at 7:12 a.m. New York time, after touching a one-week high of 70.85. The yen weakened 0.1 percent to 119.96 per dollar and appreciated 0.2 percent to 133.75 per euro. The 19-member shared currency declined 0.3 percent to $1.1149.

The MSCI Asia Pacific Index of stocks rose 1.5 percent, extending Wednesday’s 2.3 percent gain. The Stoxx Europe 600 Index climbed 0.9 percent.

China Growth

China’s official purchasing managers index rose to 49.8 last month, the National Bureau of Statistics said Thursday, compared with the median estimate in a Bloomberg survey for it to remain at the three-year low of 49.7 reached in August. Readings below 50 indicate contraction.

A private purchasing managers survey by Caixin Media and Markit Economics increased to 47.2 for September, from an initial reading of 47.0.

The Aussie declined 8.9 percent in the third quarter against the dollar, as signs of slowing growth in China set off a rout in global equities. The euro advanced 0.3 percent while the yen gained 2.2 percent, making it the best performer among 31 major currencies.

The BOJ probably will need to add stimulus as there is nothing driving inflation amid emerging signs that the Japanese economy has slipped back into recession, Kazumasa Iwata, a deputy governor from 2003-2008, said in an interview.

“It’s a classic case of risk-based pattern,” said Kengo Suzuki, chief currency strategist at Mizuho Securities Co. in Tokyo. “Right now, it’s developed-nation currencies versus emerging and commodities-linked ones which take their cues from stocks that either fuel or ease risk aversion.”

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