FOREX – AUD and NZD Gain Ground Against Other Currencies

The Australian and New Zealand dollars advanced against most of their major counterparts as Asian stocks extended a global rally, supporting demand for higher-yielding assets.

The two South Pacific currencies rose against Japan’s after Finance Minister Yoshihiko Noda signaled that he’s ready to intervene in markets again to bring down the yen. Australia’s dollar was 1 percent from a one-year low against its New Zealand counterpart as traders bet that the bigger nation’s central bank will cut interest rates.

“Australia’s and New Zealand’s currencies remain susceptible to the global economy and stock prices,” said Takuya Kawabata, a researcher in Tokyo at Gaitame.com Research Institute Ltd., a unit of Japan’s largest foreign-exchange margin company. “New Zealand has more room for interest-rate gains, while no rate increase is expected for a while in Australia.”

Australia’s dollar rose to $1.0427 as of 4:01 p.m. in Sydney from $1.0355 in New York on Aug. 12. It advanced 1 percent to 80.22 yen. New Zealand’s currency, nicknamed the kiwi, climbed to 83.81 U.S. cents from 83.22 and gained 1 percent to 64.46 yen.

The so-called Aussie traded at NZ$1.2442 from NZ$1.2443 after touching NZ$1.2319 on Aug. 10, the lowest since July 2010.

The MSCI Asia Pacific Index of regional shares rallied 1.7 percent after the Stoxx Europe 600 Index jumped 3.7 percent on Aug. 12. Standard & Poor’s 500 Index futures for September delivery showed the gauge of may increase 0.8 percent.

Intervention Warning

Noda said yesterday that “an unstable situation” was continuing and that he will take “bold action if it becomes necessary.” Japan stepped into the foreign-exchange market this month for its third attempt in a year to weaken the yen to help exporters.

Australian new-vehicle sales jumped 8.6 percent last month from June, the biggest increase since December 2000, a government report showed today.

Australia’s economy can “ride out” the turbulence in global markets, Treasurer Wayne Swan said in an e-mailed statement yesterday. While the country isn’t immune to what happens in the rest of the world, “the prospects for our region remain much stronger” than for Europe and the U.S., he said.

The Australian dollar has depreciated 3.7 percent in the past three months, the second-worst performer after the Canadian dollar among 10 developed-nation currencies. New Zealand’s currency has gained 4.8 percent over the same period.

RBA Rate Outlook

The Reserve Bank of Australia will tomorrow release minutes of its Aug. 2 meeting when policy makers left the central bank’s target rate unchanged at 4.75 percent.

Traders expect the Reserve Bank to reduce its key interest rate by 128 basis points over the next 12 months, according to a Credit Suisse Group AG index based on swaps, compared with an increase of six basis points signaled July 1.

With traders pricing in rate cuts “we doubt that the RBA Board minutes on Tuesday will add to this as the discussion of downside risks to the central bank’s global growth forecasts have been well and truly priced,” John Kyriakopoulos, Sydney- based head of currency strategy at National Australia Bank Ltd., wrote in a research note today.

The yield on Australia’s three-year government bonds was 3.89 percent after touching 3.41 percent on Aug. 9, the least since April 2009.

Australia’s government debt has handed investors a gain of 9.1 percent so far this year, the most among 26 major bond markets, according to indexes complied by the European Federation of Financial Analysts Societies. New Zealand’s bonds returned 9 percent, the second most.

Source: Bloomberg

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