Australian Dollar Gains on Bets RBA Will Hold Rates for Longer

Australia’s dollar gained against most of its 16 major peers on speculation the Reserve Bank will hold interest rates unchanged and refrain from indicating any prospect that a reduction may soon be needed.

Local bonds rose, with 10-year yields touching a four-week low, amid signs the global economy is slowing. Manufacturing data in the U.S. and China yesterday trailed economists’ estimates, while a report today is forecast to show euro-area unemployment rose to a record. New Zealand’s dollar climbed after the nation’s commodity export prices gained.

“The market is not as convinced as it was that the RBA’s going to ease further, as the economic data has stabilized,” said Mike Jones, a currency strategist at Bank of New Zealand in Wellington. “Whenever offshore markets descend into turmoil, particularly Europe, the relativities of the Australian economy and Australian assets shine brighter than they normally do, and you see a kind of safe-haven flow into Aussie dollars.”

Australia’s currency added 0.3 percent to $1.0450 as of 1:53 p.m. in Sydney from yesterday. It fetched 97.26 yen from 97.18. The Aussie rose 0.2 percent against the greenback last quarter and 8.9 percent versus the yen.

New Zealand’s kiwi dollar was up 0.2 percent to 83.89 U.S. cents. The currency traded at 78.06 yen, after a 9.7 percent quarterly gain.

Yields on Australian 10-year bonds touched 3.386 percent, the lowest level since March 6, before trading at 3.41 percent.

RBA Policy

Interest-rate swaps data compiled by Bloomberg show traders see an 6 percent chance the RBA will cut the 3 percent benchmark rate today, compared with 20 percent odds priced in one month ago. The central bank decision is due at 2:30 p.m. Sydney time.

The jobless rate in the euro area probably rose to 12 percent in March, the highest on record going back to July 1990, according to the median estimate of economists surveyed by Bloomberg News before the European Union’s statistics office in Luxembourg releases the data today.

The Purchasing Managers’ Index of Chinese manufacturing released yesterday was 50.9 for March, below the 51.2 median estimate of economists in a Bloomberg poll. In the U.S., the Institute for Supply Management’s factory index fell to 51.3 last month from 54.2 in February.

In New Zealand, commodity export prices gained 7.4 percent in March in local currency terms from the previous month, when they rose a revised 1.1 percent, ANZ National Bank Ltd. said in a report today.

New Zealand’s two-year swap rate, a fixed payment made to receive a floating rate was at 2.86 percent.

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