BLBG:Australian, N.Z. Dollars Set for Fifth Weekly Advance on Europe
The Australian and New Zealand dollars were poised for a fifth weekly advance as sovereign-debt sales in Europe signaled the region’s fiscal crisis is being contained, boosting demand for higher-yielding assets.
The so-called Aussie gained against the yen yesterday after France and Spain sold 14.6 billion euros ($18.9 billion) of bonds at lower funding costs. Demand for both South Pacific nations’ dollars was bolstered as Asian stocks advanced for a fourth day before a U.S. report forecast to show sales of existing homes rose in December to the highest since May 2010.
“Europe seems at this early stage to be stabilizing and if that continues, then the Australian economy will be very strong indeed in 2012,” said Adam Carr, a senior economist in Sydney at ICAP Australia Ltd., a unit of the world’s biggest interdealer broker. “That’s why I think we’re seeing an underlying bid for the Aussie dollar.”
Australia’s currency traded at $1.0409 at 4:36 p.m. in Sydney from $1.0419 in New York yesterday, set for a 0.8 percent weekly advance. The currency fetched 80.28 yen from 80.34 yen.
New Zealand’s dollar traded at 80.22 U.S. cents from 80.29 cents and has risen 0.9 percent since Jan. 13. It was at 61.87 yen from 61.91 yen.
Europe Auctions
The European tenders yesterday were the first sale of medium and long-term debt since Standard & Poor’s stripped France of its AAA rating and cut Spain by two levels to A on Jan. 13.
Spain has exceeded its maximum targets in all its bond auctions since Dec. 13, and demand has strengthened since the European Central Bank pumped 489 billion euros of three-year loans into the financial system on Dec. 21.
U.S. existing home purchases climbed 5.2 percent to a 4.65 million annual pace the National Association of Realtors is projected to say in a Bloomberg News survey of economists.
The MSCI Asia Pacific Index of stocks rose 1 percent.
The Australian dollar’s five weeks of gains constitute its longest winning streak since April 2011 while New Zealand’s stretch of weekly advances is the longest since the period ended July 29.
“The Aussie and kiwi may drift lower on profit-taking after extraordinarily strong rallies this year,” said Tim Kelleher, head of institutional foreign-exchange sales in Auckland at ASB Institutional, a unit of Commonwealth Bank of Australia. “The bias is to sell on rallies.”
China Manufacturing
A preliminary reading of a purchasing managers’ index (MXAP) for manufacturing in China showed an increase to 48.8 this month from a final figure of 48.7 in December, according to data published by HSBC Holdings Plc and Markit Economics. An index above 50 means the number of manufacturers who said conditions improved was greater than the number saying they deteriorated.
China’s stocks rose, sending the benchmark index to its first back-to-back weekly gain in two months, on signs the government is easing lending curbs to bolster economic growth. The nation is Australia’s largest trading partner and New Zealand’s second-biggest export destination.
Benchmark interest rates are 4.25 percent in Australia (RBACTR) and 2.5 percent in New Zealand, compared with as low as zero in the U.S. and Japan, attracting investors to the South Pacific nations’ higher-yielding assets. The risk in such trades is that currency market moves will erase profits.
Australia’s benchmark 10-year bond yield rose eight basis points, or 0.08 percentage points, to 3.82 percent. New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, was little changed at 2.81 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
