Australia’s dollar rose against the yen and the nation’s bond yields increased after a report showed retail sales gained by more than economists forecast. The currency traded 0.2 percent from a four-week high versus the U.S. dollar as traders reduced bets on interest-rate cuts by the Reserve Bank of Australia. New Zealand’s currency trimmed a four-day advance after data showed prices for the nation’s commodities declined last month. The Aussie dollar is supported as “the market moves to price in a sensible track for the RBA,” said Matthew Johnson, a strategist at UBS AG in Sydney. “This data will push yields higher because it reminds the market that what’s priced in is unrealistic.” Australia’s dollar rose to 82.25 yen as of 2:47 p.m. in Sydney from 82.08 yen in New York yesterday and earlier reached 82.67, the strongest since Aug. 5. It bought $1.0702 from $1.0707 in New York and earlier reached $1.0723, the strongest level since Aug. 4. New Zealand’s currency slid to 65.27 yen from 65.48 yen. The kiwi dollar fell 0.5 percent to 84.96 U.S. cents. The MSCI Asia Pacific Index rose 1 percent today, following a 0.5 percent advance in the Standard & Poor’s 500 Index yesterday. Retail sales in Australia advanced 0.5 percent in July from June, the first monthly advance in three, data from the Bureau of Statistics showed today. Separate figures from the bureau showed that business investment rose 4.9 percent in the second quarter from the previous three months, when it increased 7.7 percent, according to revised figures. Rate Cuts “The market has to price out the rate cuts,” said Matthew Brady, executive director for foreign exchange at JPMorgan Chase & Co. in Sydney. “If anything, I think the next move will be a rate hike, but I think they’ve got plenty of time to let the global uncertainties to be washed out.” The Australian dollar is poised for a weekly gain against the greenback. The nation’s two-year bond yield rose 7 basis points to 3.82 percent from yesterday. A Credit Suisse AG index based on swaps trading shows traders are betting on 114 basis points in cuts to the RBA’s benchmark rate over 12 months, less than the 123 basis-point reduction signaled yesterday. RBA Governor Glenn Stevens has held the key rate at 4.75 percent for the past eight meetings to gauge the economic fallout from Europe’s debt crisis. Central bank policy makers will have their next meeting on Sept. 6. Commodity Prices The kiwi declined against the U.S. dollar for the first time in five days after a report showed that the value of New Zealand’s commodity prices fell for a third month and as a Chinese manufacturing index stayed near the borderline between expansion and contraction in August. The ANZ Commodity Price Index dropped 1.2 percent to 304.3 in August from July, when it declined a revised 0.2 percent, ANZ National said in a report today. The China Federation of Logistics and Purchasing said today purchasing managers’ index rose to 50.9 in August from 50.7 in the previous month. A reading above 50 indicates growth. “People are still very, very nervous about what may happen in Europe, and generally about what’s happening around the world as far as growth is concerned,” said Derek Mumford, a Sydney- based director at Rochford Capital, a foreign-exchange and interest-rate risk-management firm. “Commodity prices are off their highs, which is generally not good for Australia or New Zealand.” China is Australia’s biggest trading partner and is New Zealand’s second-largest export market. Raw materials comprise teh majority of both South Pacific nations’ exports. Buy on ‘Dips’ Investors should buy the Australian and New Zealand dollars on dips before the release of purchasing managers surveys for manufacturing in the euro area and U.K., amid forecasts the data will signal contractions, Citigroup Inc. said. “Expectations are for a pullback and given the earlier weakness, the risks are skewed in favor of a larger response to a positive surprise,” said Todd Elmer, head of Group-of-10 currency strategy for Asia ex-Japan at Citigroup Inc. in Singapore. Better-than-forecast results “would be supportive of risky assets and risky currencies with the Aussie and kiwi probably the two best positioned to benefit.” To contact the reporters on this story: Mariko Ishikawa in Tokyo at mishikawa9@bloomberg.net; Candice Zachariahs in Sydney at czachariahs2@bloomberg.net To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net

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