The Australian and New Zealand dollars gained the most this month versus their U.S. counterpart as speculation European policy makers will boost the firepower of their rescue fund fueled appetite for riskier assets. The Aussie rose against all but one of its 16 most-traded peers and both currencies advanced against the greenback for the first time in four days as concern eased that Europe’s debt crisis is worsening. Commodities gained. Australia’s dollar appreciated as much as 1.1 percent to $1.0337, the largest intraday gain since June 29, yesterday in New York before closing at $1.0307, up 0.8 percent. The Aussie rose 0.8 percent to 80.57 yen. New Zealand’s dollar, nicknamed the kiwi, strengthened as much as 0.9 percent, also the biggest intraday jump since June 29, to 79.17 U.S. cents before closing at 78.90 cents, up 0.6 percent. It climbed 0.6 percent to 61.68 yen. Investor demand for safety ebbed after European Central Bank council member Ewald Nowotny said there were arguments favoring giving the region’s rescue fund a banking license. Granting a banking license to the European Stability Mechanism would give it access to ECB lending, easing concern its 500 billion-euro ($608 billion) cash reserves won’t be enough if Italy or Spain require assistance as the area’s debt crisis progresses. Implied volatility on three-month options for Group-of- Seven currencies declined for the first time in four days, reaching 9.5 percent, according to the JPMorgan G7 Volatility Index. It advanced to 9.83 percent the day before, the highest level this month. The average over the past five years is 12.4 percent. Decreased volatility makes investments of currencies of nations with higher benchmark interest rates more attractive because there is less risk of market moves erasing profits. Standard & Poor’s GSCI Index of raw materials rose for the first time in four days, gaining 0.6 percent. To contact the reporter on this story: Lindsey Rupp in New York at lrupp2@bloomberg.net To contact the editor responsible for this story: Robert Burgess at bburgess@bloomberg.net

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