BLBG:N.Z. Dollar Gains as Retail Sales Rise; Aussie Rallies on Europe Optimism
The New Zealand dollar rose for a second day after a government report showed retail sales increased by the most since 2006, adding to signs the domestic economy remains resilient.
The currencies of Australia and New Zealand gained against the greenback and the yen on speculation new leadership in Italy and Greece will help contain Europe’s debt crisis. Demand for the so-called Aussie and kiwi was also supported as Asian stocks rallied, boosting demand for higher-yielding assets.
“New Zealand data this morning was very much on the strong side,” said Grant Turley, a senior currency strategist at Australia & New Zealand Banking Group Ltd. in Sydney. “In the short term, political stability in Europe and better data out of New Zealand are going to buoy appetite for Aussie and kiwi.”
The New Zealand dollar strengthened 0.5 percent to 78.91 U.S. cents at 2:06 p.m. in Sydney. The kiwi gained 0.4 percent to 60.87 yen. Australia’s dollar strengthened 0.3 percent to $1.0309. The currency gained 0.3 percent to 79.52 yen.
The MSCI Asia Pacific Index of stocks rose 1.6 percent after the MSCI World Index rallied 2.3 percent on Nov. 11.
New Zealand’s retail sales adjusted for inflation surged 2.2 percent in the third quarter, compared with the three months ended June 30, the government statistics office said today. The gain is more than three times the 0.6 percent median estimate of 12 economists in a Bloomberg News survey and is the largest since the fourth quarter of 2006.
New Zealand’s two-year two-year swap rate, a fixed payment made to receive floating rates based on three-month bill rates, rose one basis point to 2.95 percent after dropping as low as 2.93 percent last week, the lowest since at least 1993 when Bloomberg started collecting the data. Swaps are often used to speculate on changes in interest rates.
Australia’s government bonds declined, with 10-year yields rising five basis points to 4.18 percent.
Monti Government
Mario Monti, a former European Union competition commissioner, will lead a new government in Italy after contagion from the euro region’s debt crisis led to the unraveling of Silvio Berlusconi’s ruling coalition. President Giorgio Napolitano offered Monti the post of prime minister after sounding out political parties for their support.
Gains in the Australian and New Zealand dollars were limited before Italy auctions as much as 3 billion euros ($4.1 billion) of notes maturing in September 2016 today.
“The growth dynamics and debt dynamics in Italy remain challenging,” said Callum Henderson, global head of foreign- exchange research in Singapore at Standard Chartered Plc. “The situation in Italy and in Europe in general remains relatively fluid. I would expect this rally to be short lived.”
The Reserve Bank of Australia will tomorrow release minutes of its Nov. 1 meeting when the central bank cut the benchmark interest rate by 25 basis points to 4.5 percent.
“The RBA very rarely just cuts once in a cycle, so further easing is expected,” said Henderson. “The question is the pace. The market is going to be looking for the tone of the minutes in terms of further easing.”
To contact the reporter responsible for this story: Mariko Ishikawa in Tokyo at mishikawa9@bloomberg.net
To contact the editor responsible for this story: Garfield Reynolds at greynolds1@bloomberg.net
