Australian Dollar Supported Before China Data; Bonds Rise
The Australian dollar held gains from last week before data forecast to show China’s economy grew at the fastest pace in a year, boosting trade prospects.
The so-called Aussie was near a three-month high against the U.S. currency before a report that may show home loans increased in Australia. Local bonds rose as global stocks fell, increasing demand for safer assets. The cost to protect against gains in the currency was near the lowest in 3 1/2 years before the Reserve Bank of Australia releases tomorrow the minutes of this month’s meeting, when policy makers refrained from cutting interest rates.
“If the numbers from China are reasonably solid, it will be supportive of the Australian dollar,” said Hans Kunnen, chief economist in Sydney at St. George Bank Ltd. “We remain relatively bullish on the Australian dollar for fundamental reasons, one of which is ongoing reasonably firm commodity prices.”
Australia’s dollar traded at $1.0506 at 10:09 a.m. in Sydney from $1.0508 on April 12, when it completed a 1.2 percent weekly gain. It touched $1.0582 on April 11, the highest since Jan. 11.
The currency’s three-month risk reversal was at minus 1.3425 after touching minus 1.3075 on April 12, the highest since October 2009. The Aussie fetched 103.50 yen from 103.36.
The New Zealand dollar, known as the kiwi, fell 0.2 percent to 86.68 U.S. cents from the end of last week, when it posted a 1.9 percent five-day gain. It lost 0.1 percent to 84.41 yen.
Australia’s government bonds rose, pushing the 10-year yield down five basis points, or 0.05 percentage point, to 3.26 percent. The MSCI World Index (MXWO) declined 0.4 percent on April 12.
China’s gross domestic product probably expanded 8 percent in the three months ended March 31 from a year earlier, the fastest growth since the first quarter last year, according to the median estimate of economists in a Bloomberg News survey. The figures are due for release today. China is Australia and New Zealand’s biggest trading partner.
The RBA will tomorrow release minutes of the April 2 meeting when it left the cash rate at 3 percent. Interest-rate swaps data compiled by Bloomberg show traders see a 32 percent chance the central bank will lower its benchmark to 2.75 percent at the next meeting on May 7.
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