BLBG:Australian Dollar Gains, Reversing Loss, After China Manufacturing Report
The Australian dollar reversed earlier losses against its U.S. counterpart after a private report showed China’s manufacturing shrank at a slower pace this month, easing concerns that the global economy is slowing.
The so-called Aussie gained against most of its 16 major counterparts as Asian stocks climbed, supporting demand for higher-yielding currencies. The New Zealand dollar rose even after a report today showed that corporate executives have reduced their inflation expectations.
“The data flow across the globe has been quite weak recently so even a secondary indicator like this that comes out stronger than expected can have some impact” on the Australian and New Zealand dollars, Todd Elmer, head of Group-of-10 currency strategy for Asia ex-Japan at Citigroup Inc. in Singapore, said of the China manufacturing report.
Australia’s dollar advanced to $1.0453 as of 2:02 p.m. in Sydney from $1.0409 in New York yesterday after falling to as low as $1.0387. It bought 80.28 yen from 79.93. New Zealand’s currency traded at 82.77 U.S. cents from 82.42 and rose to 63.56 yen from 63.29 yen.
A preliminary gauge of China manufacturing in August was 49.8, according to a reading of the Purchasing Managers’ Index reported by HSBC Holdings Plc and Markit Economics today. That compares with a final reading for July of 49.3. A number below 50 indicates contraction.
The MSCI Asia Pacific Index of regional shares rose 1 percent, set for its first advance in four days.
Inflation Expectations
New Zealand company executives expect inflation to average 2.86 percent in two years’ time, a report from the Reserve Bank of New Zealand showed today. Expectations were 3 percent in the previous survey.
The two-year overnight-index swap rate, an indication of what traders expect the central bank’s key interest rate will average during the period, was at 3 percent today, compared with the official cash rate of 2.5 percent.
“The bias for the Reserve Bank’s move is an increase rather than a cut in interest rates,” said Takuya Kawabata, a researcher in Tokyo at Gaitame.com Research Institute Ltd., a unit of Japan’s largest foreign-exchange margin company.
To contact the reporters on this story: Masaki Kondo in Singapore at mkondo3@bloomberg.net; Mariko Ishikawa in Tokyo at mishikawa9@bloomberg.net.
To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net.
