The Australian and New Zealand dollars rose against the majority of their most-traded peers after U.S. President Barack Obama proposed a $447 billion package to spur hiring in the world’s largest economy. The so-called Aussie and kiwi trimmed weekly losses against the greenback as a government report showed China’s inflation cooled in August from a three-year high, easing concern the nation will take further steps to curtail price gains. China is Australia’s largest trading partner and New Zealand’s second- biggest export market. Obama’s jobs package “should improve sentiment and that would be positive for the Aussie and the kiwi,” said Janu Chan, an economist at St. George Bank Ltd. in Sydney. Australia’s currency advanced to $1.0625 at 1:54 p.m. in Sydney from $1.0576 yesterday in New York. It gained to 82.31 yen from 81.97 yen. The New Zealand dollar rose 0.5 percent to 83.53 U.S. cents and strengthened 0.5 percent to 64.71 yen. The Aussie has declined 0.2 percent against the dollar this week, and the kiwi has dropped 1.5 percent. Obama called on Congress to pass a jobs proposal that includes infrastructure spending, subsidies to local governments and tax reductions. The centerpiece of the plan is cuts in payroll taxes, which cover the first $106,800 in earnings and are evenly split between employers and employees. The Australian dollar has appreciated 5.6 percent against nine peers in the past month, the best performer on the Bloomberg Correlation-Weighted Currency indexes. The New Zealand dollar has gained 2.4 percent. China Inflation China’s consumer prices climbed 6.2 percent from a year earlier in August, the National Bureau of Statistics said in Beijing today. That was in line with the median forecast in a Bloomberg News survey of economists and compares with a 6.5 percent increase in July. The moderation of inflation may encourage China to keep interest rates on hold after five increases in the past year. Premier Wen Jiabao said last week that while stabilizing prices remains the top priority, policies must avoid imposing “excessive shocks” on the economy. China’s inflation “will be less of an issue going forward,” said Mitul Kotecha, head of global currency strategy in Hong Kong at Credit Agricole CIB. “We should see more support for the Australian and New Zealand dollars.” Producer prices climbed 7.3 percent last month from a year earlier, data from China’s statistics bureau also showed today. ‘Intensified Downside Risks’ Gains in the Australian and New Zealand currencies were limited after the European Central Bank cut its growth forecasts for the euro-area economy amid concern the region’s debt crisis is worsening. The economy faces “particularly high uncertainty and intensified downside risks,” President Jean-Claude Trichet said at a press conference in Frankfurt yesterday. The ECB cut its growth forecast for 2011 to 1.6 percent from 1.9 percent and to 1.3 percent from 1.7 percent for 2012. The Governing Council left the benchmark interest rate unchanged at 1.5 percent. Yields on Australia’s three-year government bonds rose three basis points, or 0.03 percentage points, to 3.68 percent. Ten-year yields were little changed at 4.26 percent after falling 7.5 basis points yesterday. To contact the reporters on this story: Mariko Ishikawa in Tokyo at mishikawa9@bloomberg.net; Monami Yui in Tokyo at myui1@bloomberg.net To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net

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