Aussie Rallies From Three-Month Low After China PMI, Kiwi Climbs

Australia’s dollar rallied from near its weakest level in three months and New Zealand’s currency rose for a second day after two reports showed China’s manufacturing expansion was stronger than estimated.

New Zealand’s dollar climbed versus Australia’s after data showed export prices relative to import prices in the smaller economy rose to the highest level in 40 years. The Aussie strengthened after data showing building approvals fell less than estimated, while company profits climbed more than anticipated. Demand for the currency may be resilient before a Reserve Bank meeting tomorrow, when analysts predict policy makers will keep interest rates unchanged at 2.5 percent.

“The Aussie has started the week on a firmer footing, which is all to do with the China data,” said Ray Attrill, the global co-head of currency strategy at National Australia Bank Ltd. in Sydney. “The conditions for something of a reversal are perhaps falling into place. The market is looking for an excuse to buy back the Aussie and tomorrow’s RBA statement may provide that excuse.”

The Australian dollar rose 0.6 percent to 91.60 U.S. cents as of 6:06 p.m. in Sydney after falling as low as 90.56 on Nov. 29, the least since Sept. 4. It gained 0.6 percent to 93.86 yen. New Zealand’s currency climbed 1 percent to 82.07 U.S. cents and 1 percent to 84.08 yen. It advanced 0.5 percent to NZ$1.1159 per Aussie.

The Aussie’s relative strength index last week fell below the 30 level that signals it has fallen too rapidly and may be poised to reverse.

China PMI

China’s Purchasing Managers’ Index was 51.4, the National Bureau of Statistics and China Federation of Logistics and Purchasing said yesterday. That’s the same reading as October’s, an 18-month high, and exceeded 24 out of 26 estimates in a Bloomberg News survey. A separate gauge from HSBC Holdings Plc and Markit Economics today was 50.8, topping all 13 analysts’ projections. Numbers above 50 signal expansion.

New Zealand’s terms of trade climbed 7.5 percent in the third quarter, the biggest gain in 40 years, the statistics department said today. Dairy prices surged 24 percent from the previous quarter, led by milk powder and butter. The nation’s two-year swap rate, a fixed payment made to receive floating rates, was little changed at 3.69 percent, near the highest level since August 2011.

Australia’s three-year bond yield rose five basis points, or 0.05 percentage point, to 3.11 percent. The 10-year rate gained six basis points to 4.29 percent.

RBA Changes

The RBA will probably keep its benchmark unchanged at a record-low 2.5 percent tomorrow and through 2014, according to the median forecast of economists in a Bloomberg News survey.

“Changes to watch for include a more upbeat view of non-mining capex and the consumer, which would hint at further policy traction and suggest that the currency is less ‘‘uncomfortable’’ although still high,” Sue Trinh, a Hong Kong-based currency strategist at Royal Bank of Canada, wrote in a note to clients. “We expect a mild easing bias to remain intact.”

Building approvals in Australia fell 1.8 percent in October compared with the previous month, less than the 5 percent decline forecast in a Bloomberg survey. Company operating profits rose 3.9 percent in the third quarter compared with the median estimate of a 1 percent gain, a separate report showed.

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