Aussie Touches Four-Month Highs as U.S. Debt Deal Revives Demand
Australia’s dollar touched four-month highs versus the yen and the greenback as U.S. lawmakers voted on a deal to end a government shutdown and raise the debt limit, bolstering demand for riskier assets.
The Aussie maintained a six-day advance versus the U.S. currency before Chinese data tomorrow forecast to show growth in the world’s second-largest economy accelerated, boosting prospects for Australia’s commodities exports. New Zealand’s kiwi dollar strengthened to the highest in five months.
“The Aussie and kiwi are being bought amid risk-on sentiment owing to a resolution to the U.S. debt ceiling,” said Takuya Kawabata, a Tokyo-based analyst at Gaitame.com Research Institute Ltd., a unit of Japan’s largest currency-margin company. “The Chinese economy is picking up.”
The Australian dollar fell 0.2 to 94.17 yen as of 1 p.m. in Sydney after reaching 94.50, the strongest since June 6. It was little changed at 95.42 U.S. cents after earlier reaching 95.69, the highest since June 18.
New Zealand’s currency was at 83.23 yen from 83.21. It added 0.1 percent to 84.33 U.S. cents after touching 84.46, the highest since May 9.
The MSCI Asia Pacific Index of shares gained 0.8 percent.
The Senate acted the day before U.S. borrowing authority was scheduled to lapse as Congress engaged in its fourth round of fiscal brinkmanship in less than three years. The House of Representatives has enough votes to clear the fiscal agreement and President Barack Obama supports the plan.
China’s Bureau of Statistics is likely to say tomorrow that gross domestic product expanded 7.8 percent in the July-September period from a year earlier, according to the median estimate of economists surveyed by Bloomberg News. The country, Australia’s biggest overseas market, grew 7.5 percent in the second quarter.
Yields on Australia’s three-year government note declined eight basis points, or 0.08 percentage point, to 3.09 percent. They climbed to 3.21 percent yesterday, a level unseen since April 2012.
The Aussie at 95.50 U.S. cents means short-term interest rates in the nation will be “lower for even longer,” Robert Mead, a Sydney-based portfolio manager at Pacific Investment Management Co., wrote in a Twitter post. The Reserve Bank of Australia has kept the benchmark rate at a record 2.5 percent since August.
The Australian dollar’s two-year decline versus its New Zealand counterpart may have set it up for a rally, trading patterns suggest.
The Aussie’s 17 percent drop since March 2011 against the kiwi made the currency its most oversold in 10 years, monthly stochastics show. Failure to break below a so-called level of support around NZ$1.1200 has created a reversal pattern that may lead it to rally as much as 6 percent, according to Citigroup Inc., the world’s second-largest currency trader.
The bigger nation’s currency has weakened against the kiwi amid speculation the Reserve Bank of New Zealand will raise the official cash rate from 2.5 percent. Traders are almost certain that the RBNZ will increase borrowing costs by June, according to data compiled by Bloomberg on overnight-index swaps.
The exchange rate declined 0.2 percent to NZ$1.1315 today. It touched NZ$1.12 on Aug. 1, the lowest since October 2008.
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