Aussie Rises Against Major Peers on Japan Stimulus; Kiwi Slides

Australia’s dollar rose against most of its 10 developed-market peers on speculation Japan will increase spending to bolster its economy, supporting demand for assets linked to global growth.

The so-called Aussie advanced versus the New Zealand dollar before data this week forecast to show improvement in retail sales and building approvals in Australia. New Zealand’s currency, known as the kiwi, weakened against the majority of its peers as Asian stocks halted an advance from last week.

“Considering the relatively deep economic ties, an accelerated rebound in Japan’s economy will be positive” for the Australian currency, said Kengo Suzuki, a strategist in Tokyo at Mizuho Securities Co., a unit of Japan’s third-largest bank by market value. Suzuki said he is “bullish” on the Australian dollar.

The Australian dollar traded at $1.0469 as of 4:23 p.m. in Sydney after rising 0.1 percent on Jan. 4 to $1.0480. The Aussie advanced 0.2 percent to NZ$1.2627. The kiwi fell 0.3 percent to 82.90 U.S. cents.

The MSCI Asia Pacific Index of shares declined 0.3 percent today after climbing 1.8 percent last week.

The yield on Australia’s benchmark three-year government note touched 2.87 percent, the highest since Aug. 17, and was at 2.83 percent, down 2 basis points since Jan. 4. New Zealand’s two-year swap rate was little changed at 2.78 percent after earlier rising to 2.8 percent, a level unseen since Aug. 17.

Japan is planning an extra budget that includes as much as 6 trillion yen ($68 billion) for public works, the Yomiuri newspaper reported today, without saying where it obtained the information. The nation is Australia’s biggest export market after China.

Australia’s Economy

Australia’s Bureau of Statistics will probably say on Jan. 9 that retail sales rose 0.3 percent in November from a month earlier, according to the median estimate of economists surveyed by Bloomberg News. The report will be followed by data the next day that may show the number of permits granted to build or renovate houses and apartments increased 3 percent from October, economists forecast.

Hedge funds and other large speculators raised their bullish wagers on the Australian dollar for the first time in almost a month. Bets on an advance in the Aussie against the U.S. dollar outnumbered those on a decline by 79,522 on Jan. 1, the first increase in the so-called net longs since Dec. 11, according to figures from the Washington-based Commodity Futures Trading Commission.

Technical Indicator

The Australian and New Zealand’s dollars snapped gains from Jan. 4 versus the yen as a technical indicator traders use signaled the South Pacific nations’ currencies have been overbought. The Aussie’s 14-day relative-strength index versus the Japanese currency climbed to 79 on Jan. 4, while that for the kiwi advanced to 74. Readings above 70 indicate an asset price may be poised to fall.

The Aussie earlier climbed to 92.85 yen, and the kiwi reached 73.54 yen, the strongest levels for both currencies since September 2008. The Australian dollar slid 0.4 percent to 92.06 yen following a 1.2 percent jump on Jan. 4. New Zealand’s currency dropped 0.5 percent to 72.90 yen after a 1.5 percent surge at the end of last week.

Traders see about a 60 percent chance that the Reserve Bank of Australia will set the benchmark interest rate at 2.75 percent or lower in March, from 3 percent now, according to data on overnight-index swap rates.

The Australian and New Zealand dollars can “expect to see a bit more of near-term consolidation,” Jonathan Cavenagh, a currency strategist at Westpac Banking Corp. in Singapore, said in a Bloomberg Television interview. “We still have the view that the RBA is going to be cutting rates at least one more time this year, probably in the March meeting.”

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