Aussie Rises as RBA Says More Scope for Non-Resource Demand
Australia’s dollar rose against most of its major counterparts after the nation’s central bank refrained from cutting its benchmark interest rate.
The currency, nicknamed the Aussie, rebounded from an eight-month low against its U.S. counterpart after Reserve Bank of Australia Governor Glenn Stevens said in a statement today that “there will be more scope for some other areas of demand to strengthen” as resource investment peaks, and that previous rate cuts “are having some of the expected effects.” New Zealand’s currency advanced versus the greenback as gains in Asian stocks boosted demand for higher-yielding assets.
“The RBA was a little bit more upbeat on the outlook for capital expenditure and it continued to say that past easing is having an impact on the economy,” said Khoon Goh, a Singapore- based foreign-exchange strategist at Australia & New Zealand Banking Group Ltd. “The market has taken Stevens’ comments on resources spending positively and that’s why we’ve seen the Aussie move higher.”
The Australian dollar rose 0.4 percent to $1.0238 as of 1:18 p.m. in New York, after touching $1.0115 March 4, the lowest since July 12. It was gained 0.4 percent to 95.68 yen. New Zealand’s currency advanced 0.3 percent to 82.98 U.S. cents. The currency, nicknamed the kiwi, increased 0.2 percent to 77.55 yen.
The MSCI Asia Pacific Index of shares advanced 0.4 percent.
The RBA’s Stevens reiterated in his statement that the inflation outlook “would afford scope to ease policy further, should that be necessary to support demand.” The central bank lowered its benchmark interest rate by 1.75 percentage points in the 14 months through December to the current level of 3 percent.
Interest-rate swaps data compiled by Bloomberg show traders see a 31 percent chance the rate will fall to a record 2.75 percent or lower at the next meeting on April 2.
Before the policy decision, Australian retail sales rebounded 0.9 percent in January from three months of declines. The median estimate of economists surveyed by Bloomberg News was for a 0.4 percent gain.
The current-account deficit unexpectedly narrowed in the fourth quarter to A$14.7 billion ($15 billion), from a revised A$15 billion in the previous period. The median economist estimate was A$15.3 billion in a Bloomberg survey.
In China, Australia’s biggest trading partner, services industries expanded at a slower pace in February than a month earlier, according to a private survey. China’s services Purchasing Managers’ Index released by HSBC Holdings Plc and Markit Economics slipped to 52.1 from 54 in January. A reading above 50 indicates expansion.
To contact the editor responsible for this story: Rocky Swift at email@example.com