The Australian and New Zealand dollars pared gains after touching the highest levels in a week as Chinese Prime Minister Wen Jiabao failed to announce an increase to the government’s $585 billion stimulus package. The currencies also trimmed advances against the yen after an Australian government report showed home-building approvals unexpectedly fell in January for a seventh month. China’s public spending, mostly on infrastructure, will more than double in 2009 to 908 billion yuan ($133 billion), Wen said in his annual speech to China’s parliament. “People were pumped up for a big one from China and it wasn’t as big as we’d hoped,” said Joseph Capurso, a currency strategist in Sydney at Commonwealth Bank of Australia, Australia’s second biggest lender. Still, “the emphasis on increased infrastructure spending is good for Australia.” Australia’s currency rose 0.7 percent to 64.29 U.S. cents as of 5:18 p.m. in Sydney from late in Asia yesterday. It touched 65.27 cents, the highest since Feb. 27. The currency advanced 0.8 percent to 63.90 yen after reaching 64.79, the strongest since Jan. 9. New Zealand’s dollar climbed 0.7 percent to 50.22 U.S. cents from 49.87 in Asia yesterday and reached 50.78 cents, the most since Feb. 27. It bought 49.76 yen from 49.56. The Australian and New Zealand dollars may fall towards 63 cents and 49.50 cents respectively, CBA’s Capurso said, as the European Central Bank and the Bank of England will probably both lower interest rates by 50 basis points today, according to economists forecasts. “The disappointment trade is going to dominate unless the ECB comes out with something big,” he said. China Spending China’s fiscal spending will rise 22 percent this year to 7.62 trillion yuan, a smaller increase than last year’s actual 25.4 percent gain, Wen said. Raw materials account for 60 percent of Australia’s exports while sales of commodities including lumber make up 70 percent of New Zealand’s overseas shipments. China is Australia’s second-biggest export market after Japan. “The Chinese package is about cushioning the economy,” said Philip Wee, a senior currency economist at DBS Group Holdings Ltd. in Singapore. “Commodities alone cannot drag the Aussie up, it needs the global economy to bottom out and Asian economies to be strong again.” Australia’s currency also pared gains after government reports showed home-building approvals were weaker than forecast and the trade surplus widened by less than expected in January. House Permits The number of permits granted to build or renovate houses and apartments declined 3.7 percent from December, the Bureau of Statistics said in Sydney. The trade surplus expanded to A$970 million ($623 million) compared with a median estimate for A$1.1 billion, a separate report showed. The Australian dollar may rally toward 68.25 yen, Citigroup Inc. said in a note yesterday. The currency advanced to its strongest in two months against the yen today after bouncing off its 55-day moving average on March 3, when it fell as low as 61.04 yen. “A breach of trend and horizontal resistance at 64.30- 64.57 yen would be bullish,” wrote New York-based Tom Fitzpatrick and London-based Shyam Devani. Some traders use charts to indicate resistance levels where sell orders may be clustered. Bill Sale Australia’s government raised A$1.1 billion from its first auction of short-term securities since October 2003 to fund extra spending aimed at supporting the domestic economy. The government sold A$300 million of debt maturing on April 17 at an average weighted yield of 3.185 percent, with investors offering to buy 7.2 times the securities available, the Australian Office of Financial Management said today. It auctioned A$500 million of June 5 bills at 3.06 percent, with a so-called bid-to-cover ratio of 8.9 times, and A$300 million of securities due on Sept. 4 at 2.92 percent. “The coverage ratios suggest that there’s a very high demand for these sorts of instruments in this environment,” said Tony Morriss, a senior markets strategist at Australia & New Zealand Banking Group Ltd. in Sydney. Australian government bonds fell for a third day. The yield on the benchmark 10-year note added six basis points, or 0.06 percentage point, to 4.41 percent, according to data compiled by Bloomberg. The price of the 5.25 percent security due March 2019 slipped 0.469, or A$4.69 per A$1,000 face amount, to 106.749. New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, rose to 3.30 percent from 3.27 yesterday.

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