BLBG:Aussie, Kiwi Dollars Touch Week High as European Bailout Fund Spurs Demand
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 the region’s bailout fund and leaders worked toward a Dec. 9 summit.
The so-called Aussie maintained four days of gains 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, held a two-day advance against the greenback 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,” 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 traded at 99.78 U.S. cents at 5:12 p.m. in Sydney from $1 in New York yesterday, after touching $1.0087, the most since Nov. 18. The currency fell 0.2 percent to 77.77 yen, after reaching 78.61, the highest level since Nov. 15.
New Zealand’s dollar fetched 76.06 U.S. cents from 76.10 yesterday and was little changed at 59.26 yen. It earlier 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 shares sank 0.4 percent.
Business Investment
Ministers meeting in Brussels yesterday agreed to create certificates that could guarantee as much as 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 gathering of finance ministers.
Australia’s currency held a two-day gain 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.
‘Alarming’ Yields
The “data should see the Australian dollar well supported,” Tim Waterer, a foreign-exchange dealer at CMC Markets in Sydney, wrote in a note to clients today. “The currency’s hold above parity is still looking rather precarious given the alarming levels of Spanish and Italian yields.”
Italy was forced yesterday to pay above the 7 percent threshold that prompted Greece, Portugal and Ireland to seek bailouts when it sold 7.5 billion euros ($10 billion) in bonds, short of the maximum target for the auction.
The kiwi climbed for a third day against the dollar after 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.
New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, fell to 2.80 percent from 2.83 yesterday. Australia’s benchmark 10-year bond yield dropped four basis points to 3.93 percent.
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
