Aussie Climbs to 10-Month High With Kiwi as Stocks Resume Rally

  • Australian dollar gains could complicate rebalancing, RBA says
  • Japanese finance minister warns against abrupt yen moves

The Australian and New Zealand dollars climbed to their highest levels in 10 months, while the yen fell, as a surge in Asian equities fueled demand for high-yielding assets.

The Aussie strengthened against all its developed-market peers except for the kiwi even after Reserve Bank of Australia officials said the currency’s appreciation could complicate rebalancing the economy away from mining, according to minutes of an April meeting released Tuesday. The yen fell for a second day versus the greenback after Finance Minister Taro Aso said Japan will take various measures on any abrupt strengthening or weakening of its currency.

“The risk environment has turned positive,” said Sim Moh Siong, a foreign-exchange strategist at Bank of Singapore Ltd. “This is why commodity currencies have outperformed with the dollar on a weaker footing, and dollar-yen inching up to benefit from the risk-on.”

Australia’s currency climbed 0.6 percent to 77.93 U.S. cents at 7:08 a.m. in London, after earlier reaching 77.94, the strongest level since June 22. The New Zealand dollar advanced 0.8 percent to 70.08 U.S. cents, after touching 70.09, the highest since June 17.

The yen dropped 0.1 percent to 108.96 per dollar, adding to a 0.1 percent decline on Monday. The MSCI Asia Pacific Index of regional equities gained 1.7 percent, headed for its ninth advance in 10 sessions.

‘To Scare’

The Bloomberg Dollar Spot Index, which tracks the greenback versus 10 major currencies, fell for a third day, slipping 0.2 percent.

There was nothing in Tuesday’s RBA minutes “to scare” Aussie bulls, said Sean Callow, a Sydney-based currency strategist with Westpac Banking Corp.

The RBA noted that the economy’s 3 percent expansion in 2015 was better than forecast and recent data suggest that a moderate pace of growth had continued in early 2016. The central bank reiterated that “an appreciating exchange rate could complicate progress in activity rebalancing towards the non-mining sectors of the economy.”

The Aussie has climbed more than 12 percent in the past three months, propelled by a lower probability of U.S. policy tightening as the RBA remains on hold and commodity prices rebound. 

Futures prices indicate traders put the odds of one Fed interest-rate increase this year in December at 49 percent, down from 54 percent as recently as April 6.

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