Australia’s dollar advanced toward the most since July 2008 and New Zealand’s currency gained as rising Asian stocks boosted demand for higher-yielding assets. The South Pacific nations’ currencies were both set to complete a five-week gain before reports that economists said will show German producer prices increased for a sixth month and U.S. consumer confidence improved. They also rose as the VIX Index, Wall Street’s so-called fear gauge retreated. “Worries about a double-dip recession are weakening,” said Hiroshi Yanagisawa, a dealer in Tokyo at FX Prime Corp., a foreign-exchange unit of Itochu Corp. “This will encourage a shift in fund allocation back into higher-yield assets.” Australia’s dollar climbed to 94.32 U.S. cents at 2:32 p.m. in Sydney from 93.69 yesterday in New York. It advanced to 80.94 yen from 80.36. New Zealand’s dollar rose to 72.96 U.S. cents from 72.40 yesterday. It gained 62.59 yen from 62.10. The MSCI Asia Pacific Index of shares gained 0.9 percent. Futures for the Standard & Poor’s 500 Index added 0.5 percent. German producer prices rose 0.3 percent in August from July, when they climbed 0.5 percent, according to a Bloomberg survey of economists before the report today. The Thomson Reuters/University of Michigan preliminary index of U.S. consumer sentiment rose to 70 in September from 68.9 in August, another Bloomberg survey showed before today’s data. Confidence Weakens Gains in the kiwi were limited as a report showed New Zealand’s consumer confidence deteriorated in the third quarter, clouding prospects for further rate gain. “There is a strong chance that future rate increases in New Zealand will come in at a slower than expected pace,” said Akira Maekawa, a senior economist at online currency trading company Global Futures & Forex Ltd. in Tokyo. “New Zealand’s dollar will struggle to make clear headway.” The household sentiment index slid to 114.1 from 119.3 in the June quarter, Westpac Banking Corp. and McDermott Miller Ltd. said in a report today. A reading above 100 indicates optimists outnumber pessimists. The Reserve Bank of New Zealand left the overnight cash rate at 3 percent yesterday after raising it in June and July. The bank cut its building and inflation forecasts and said the Sept. 4 earthquake in the South Island city of Christchurch may reduce growth by 0.3 percentage point this quarter. Reserve Bank Governor Alan Bollard said the worst earthquake in 80 years has “significantly disrupted economic activity and is likely to continue to do so for some time.” Rate Outlook Swaps traders forecast the RBNZ will raise interest rates by 67 basis points over the next 12 months, down from 72 points on Sept. 14, an index compiled by Credit Suisse showed. New Zealand’s currency may drop to 71.5 cents by the end of March, as the central bank is likely to raise interest rates only once by then to 3.25 percent, Maekawa said. The Australian dollar fell earlier on concerns the nation’s central bank will extend a pause in interest-rate increases. “Upward momentum has stalled as RBA hike expectations have stepped back a bit,” said John Kyriakopoulos, head of foreign- exchange strategy in Sydney at National Australia Bank Ltd. A range of 94.30 cents to 94.60 cents “will provide stiff resistance in the near term,” he said. Swap traders see a 20 percent chance the RBA will raise the cash rate in the next month, according to a separate index by Credit Suisse Group AG. Seventeen economists out of 18 surveyed by Bloomberg News forecast no action on the Oct. 5 meeting. New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, was little changed at 3.76 percent. Australian bonds fell, with the yield on the benchmark 10- year note rising six basis points to 5.10 percent, according to data compiled by Bloomberg. To contact the reporter on this story: Yasuhiko Seki in Tokyo at yseki5@bloomberg.net.

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