BLBG:Aussie, Kiwi Dollars Advance to Week Highs as Europe Agrees to Expand Fund
The Australian and New Zealand dollars touched the highest levels in more than a week as euro- area officials agreed to extend the capacity of Europe’s stability fund and leaders worked toward a Dec. 9 summit.
The so-called Aussie gained for a fifth day versus the yen as a government report showed business investment rose by more than economists forecast in the third quarter. New Zealand’s currency, nicknamed the kiwi, gained against most of its most- traded counterparts after a report showed home-building approvals rose in October for the third time in four months as the nation recovers from earthquakes on the South Island.
“There will probably be consolidation in the risk currencies up till Dec. 9, because if there is something that indicates we are going to see a game-changing moment down the line, you don’t want to be short,” said Chris Weston, an institutional dealer at IG Markets in Melbourne. “The market is already massively short euro and has pared back longs on other risk currencies, so it doesn’t take a huge amount,” to boost the Aussie and kiwi, he said. A short is a bet prices will fall.
Australia’s dollar rose 0.2 percent to $1.0018 at 2:23 p.m. in Sydney from $1 in New York yesterday, after touching $1.0087, the most since Nov. 18. The currency advanced 0.2 percent to 78.08 yen, after reaching 78.61 yen, the most since Nov. 15.
New Zealand’s dollar climbed 0.2 percent to 76.28 U.S. cents and also gained 0.2 percent to 59.45 yen. It reached as high as 76.64 cents, the most since Nov. 17.
The Aussie and kiwi pared daily gains as Asian stocks extended a decline, sapping demand for higher-yielding currencies. The MSCI Asia Pacific Index (MXAP) of regional shares and Standard & Poor’s 500 Index futures both sank 0.7 percent.
Business Investment
Ministers meeting in Brussels agreed to create certificates that could guarantee up to 30 percent of new issues from troubled euro-area governments and to create investment vehicles that would boost the European Financial Stability Facility’s firepower.
Luxembourg’s Jean-Claude Juncker said the euro area will explore boosting the International Monetary Fund’s resources through bi-lateral loans, after leading a meeting of finance ministers yesterday.
Australia’s currency gained for a third day against the greenback after the government statistics agency said private capital expenditure rose 12.3 percent in the three months through September. The median forecast in a Bloomberg News survey of economists was for an 8 percent increase.
New Zealand’s home-building permits increased 11.2 percent from September, when they slumped 17.2 percent, Statistics New Zealand said today. Excluding apartment permits, which are volatile, permits rose 7.1 percent in October.
To contact the reporter on this story: Candice Zachariahs in Sydney at czachariahs2@bloomberg.net;
To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net
