Aussie, Kiwi Near 2-Week Highs on Greek Funding Optimism
The Australian and New Zealand dollars traded near their strongest levels in two weeks as speculation euro-area finance ministers will unlock bailout funds for Greece boosted demand for higher-yielding assets.
The so-called Aussie and kiwi were supported as Asian shares rose after U.S. stocks had the biggest weekly rally in in five months amid the holiday shopping season. Australia’s dollar was near a two-week low versus its New Zealand counterpart as some economists and investors forecast the Reserve Bank of Australia will lower borrowing costs at a gathering next month.
The European ministers’ meeting “might be a little bit supportive for Aussie and kiwi if something positive comes out,” said Joseph Capurso, a Sydney-based currency strategist at Commonwealth Bank of Australia (CBA), the nation’s biggest lender. “The good news is already in there. I think they might see a little bit of upside, but not a great deal.”
The Australian dollar bought $1.0454 as of 5:23 p.m. in Sydney from $1.0461 on Nov. 23, when it rose as high as $1.0471, the most since Nov. 7. The currency’s three-month implied volatility dropped to 7.3 percent, the lowest since July 2007.
New Zealand’s dollar was little changed at 82.35 U.S. cents after reaching as high as 82.51 near the end of last week, also the strongest since Nov. 7.
Australia’s 10-year yield dropped to 3.261 percent from 3.295 percent last week when the rate touched 3.302 percent, the most since Oct. 26. New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, fell 0.02 percentage point to 2.635 percent.
The MSCI Asia Pacific Index of shares climbed 0.3 percent after the Standard & Poor’s 500 Index (SPX) of U.S. stocks rallied 3.6 percent last week, the biggest five-day advance since the period ended June 8.
Finance officials from the 17-nation euro region gather today in Brussels after an all-night meeting and a European Union summit last week. The held a conference call on Nov. 24 to prepare for the meeting, where the ministers are expected to discuss ways to come up with 10 billion euros ($13 billion) to fill the financing gap that emerged when Greece this month got two more years to meet deficit-reduction targets.
In Australia, central bank officials will probably lower the overnight cash-rate target to 3 percent from 3.25 percent, according to the median estimate of economists surveyed by Bloomberg News before policy makers meet on Dec. 4.
Interest-rate swaps data compiled by Bloomberg show traders see a 64 percent chance borrowing costs will decline 25 basis points next month.
New Zealand’s central bank officials will gather for a policy decision two days after the RBA’s meeting. Governor Graeme Wheeler, who took over from Alan Bollard in September, will probably keep the policy rate at a record-low 2.5 percent, a separate poll showed. The rate has been unchanged since March last year, after an earthquake in February that struck Christchurch, the nation’s third-largest city, and the surrounding Canterbury province, killing 185 people.
The Australian dollar was little changed at NZ$1.2694 after touching NZ$1.2681 on Nov. 23, the weakest since Nov. 8.
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