Aussie Surges to Highest This Month as China Trade Recovers

Australia’s dollar surged to the highest this month against the greenback after imports in China, the South Pacific nation’s biggest trading partner, rose more than expected in July.

The Aussie advanced for a fourth day as traders pared bets the central bank will lower the benchmark interest rate. Japanese investors were net buyers of Australian government bonds for the first time in almost a year, data showed today. The currency briefly fell after a report showed Australian employers unexpectedly cut workers last month. New Zealand’s dollar held a two-day gain.

“The worst of China slowdown fear may have passed for now, and that’s helping the Australian dollar,” said John Horner, a Sydney-based strategist at Deutsche Bank AG, the world’s biggest currency trader. “There’s been considerable short positioning in the currency, and given the rally we have seen in the past few days, those positions may come under further pressure.” A short position is a bet an asset’s price will decline.

The Australian dollar jumped 1 percent to 90.86 U.S. cents as of 4:47 p.m. in Sydney from yesterday, after touching 90.89, the highest since July 30. New Zealand’s currency gained 0.1 percent to 79.81 U.S. cents, after reaching 79.98 yesterday, the most since July 31.

China Trade

Chinese imports gained 10.9 percent in July compared with a year earlier, the General Administration of Customs said today in Beijing, after unexpectedly falling 0.7 percent in June. Economists predicted a 1 percent rise last month. Exports expanded 5.1 percent, outpacing forecasts of a 2 percent increase.

Traders held record positions betting on declines in the Aussie versus the U.S. dollar last week, figures from the Washington-based Commodity Futures Trading Commission showed. The difference in the number of wagers by hedge funds and other large speculators on a drop compared with those on a gain -- so-called net shorts -- was 72,573 on July 30, compared with shorts of 63,982 a week earlier.

Japanese investors purchased a net 54.3 billion yen ($565 million) of Australian sovereign debt in June, turning net buyers for the first time in 11 months, according to data released today by Japan’s Ministry of Finance.

The Aussie weakened as much as 0.3 percent after the statistics bureau said Australian employers cut 10,200 jobs in July, and the month-before figure was revised down to 9,300 hirings. Economists polled by Bloomberg News predicted a gain of 5,000 positions. The unemployment rate was unchanged at 5.7 percent, as the participation rate fell to 65.1 percent from 65.3 percent in June.

Rate Bets

Reserve Bank of Australia Governor Glenn Stevens said in a statement on Aug. 6 after cutting the benchmark rate to a record 2.5 percent that the board “will continue to assess the outlook and adjust policy as needed to foster sustainable growth in demand and inflation outcomes consistent with the inflation target over time.”

The reduction was the second this year, and extends an easing cycle that began in November 2011, when the benchmark rate was lowered from 4.75 percent.

“There’s likely to be downward revisions to growth” when the RBA releases its Statement on Monetary Policy tomorrow, said Su-Lin Ong, Sydney-based head of Australian economic and fixed-income strategy at Royal Bank of Canada. “The macro picture here is telling you the odds are that the Aussie continues to adjust lower to a lower growth story.”

Australia’s dollar has fallen 10 percent over the past three months, the most among 10 developed-market currencies tracked by Bloomberg Correlation-Weighted Indexes. New Zealand’s dollar is the second-worst performer, with a 3.8 percent decline.

Traders place 64 percent odds that the RBA will cut its benchmark in December, interest-rate swaps data compiled by Bloomberg show. The figure was 72 percent yesterday.

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