Australia’s dollar rose to the highest level in eight months as a government report showed the economy unexpectedly expanded last quarter, avoiding two consecutive quarters of contraction. New Zealand’s currency fell. Australia’s dollar extended a record three-month advance as the report showed gross domestic product grew 0.4 percent after shrinking a revised 0.6 percent in the previous three months. The expansion enabled the economy to skirt the two straight quarters of decline often used to define a recession. “This will probably reinforce Aussie outperformance,” said Sue Trinh, senior currency strategist at RBC Capital Markets in Sydney. “Against the U.S. dollar, we still see a risk that the Australian currency hits 85 cents before we see any signs of peaking.” Australia’s currency rose as high as 82.63 U.S. cents, the most since Sept. 29, before trading at 82.55 cents as of 2:55 p.m. in Sydney, from 82.09 cents yesterday in New York. The currency gained 0.4 percent to 78.95 yen. New Zealand’s dollar slid 0.2 percent to 65.52 U.S. cents from yesterday, when it climbed to 65.94 cents, the most since Oct. 6. It dropped to 62.67 yen from 62.89 yen. The Australian dollar faces “key technical resistance” at 82.26 U.S. cents, Trinh said. “If we can hold above that, it adds to upward momentum for the Aussie in the short-term.” U.S. Dollar Bears The Australian and New Zealand dollars climbed yesterday after Russian President Dmitry Medvedev said a new supranational currency could lay the foundation for a future financial system and reduce global vulnerability to movements of the greenback. The euro strengthened beyond $1.43 for the first time in 2009. “The market is a bit nervous about the possibility of a change in the credit ratings for the U.S.,” said Jim Vrondas, manager of corporate business at online foreign-exchange dealer OzForex Ltd. in Sydney. New Zealand’s currency ended four days of gains versus the greenback after Fonterra Cooperative Group Ltd., the world’s biggest dairy exporter, said milk powder prices fell from a six- month high as its latest monthly auction. Dairy products account for about a fifth of New Zealand export earnings. The 64.50-cent level is going to be “critical for further upside,” for the New Zealand currency, which may advance as high 66 cents this week, Vrondas said. New Zealand’s currency has been the best performer against the U.S. dollar among the 16 most-active currencies over the past three months, advancing 32 percent. The currency’s strength may delay New Zealand’s recovery from its worst recession in more than three decades by about six to nine months, the New Zealand Institute of Economic Research Inc. said today. Australian Bonds Australia sold A$700 million ($576 million) of bonds maturing February 2017 today at a weighted average yield of 5.33 percent. The so-called bid-to-cover ratio at the auction was 3.3 times, up from 2.6 at the previous sale last month. Australian government bonds ended two days of declines with the yield on the benchmark 10-year note falling three basis points, or 0.03 percentage point, to 5.46 percent, according to data compiled by Bloomberg. The price of the 5.25 percent security due March 2019 gained 0.24, or A$2.40 per A$1,000 face amount, to 98.45. New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, fell to 3.56 percent from 3.59 yesterday.

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