The Australian and New Zealand dollars approached the strongest in a month as Asian stocks rose for a third day on optimism bank earnings will improve. The two currencies also strengthened as prices of commodities, which account for more than half of the nations’ exports, advanced for a third day yesterday. Australia’s dollar briefly pared gains after minutes of the March 3 central bank meeting released today showed policy makers said they had scope to cut interest rates further, “The positive turn on U.S. financials is having a broader impact on currency, interest-rate and credit markets,” said John Honan, chief economist at Ausbil Dexia Ltd. in Sydney, who helps oversee $4.9 billion in funds. “Quite clearly the RBA hasn’t finished and the outlook is for further cuts,” he said. Australia’s currency rose 0.2 percent to 66.04 U.S. cents as of 1:35 p.m. in Sydney, near a one-month high of 66.38 cents touched yesterday. It dropped to 65.78 cents after the Reserve Bank of Australia minutes were released. The currency advanced 0.3 percent to 64.90 yen from late in New York yesterday. New Zealand’s dollar gained 0.2 percent to 53.11 U.S. cents from late yesterday, when it touched 53.40 cents, the highest level since Feb. 10. It bought 52.16 yen from 52.02 yen. The MSCI Asia Pacific Index of regional shares was led higher by financials after London-based Barclays Plc said yesterday it had a “strong start” to 2009. Bank of America Corp., JPMorgan Chase & Co. and Citigroup Inc. all said last week they made money during the first two months of 2009. Rate Bets The Australian and New Zealand dollars also traded near the highest level in two months versus the yen as traders lowered the odds of a 50 basis point cut at the next RBA meeting on April 7 to 54 percent, from 91 percent, according to a Credit Suisse Group index based on swaps trading. “With the better stock market performance, the market seems to be moving away from pricing a full 50 basis-point cut,” said Tony Morriss, a senior markets strategist at Australia & New Zealand Banking Group Ltd. in Sydney. The Australian dollar is likely to find buyers at 65.50 U.S. cents and struggle to get above 66.40 cents, Morriss said. RBA Governor Glenn Stevens kept the benchmark rate at 3.25 percent on March 3, ending 4 percentage points of reductions since September. Higher Rates Higher interest rates in Australia and New Zealand, compared with 0.1 percent in Japan and as low as zero in the U.S., attract investors to the South Pacific nations’ higher- yielding assets. New Zealand’s benchmark is 3 percent. The currencies also advanced as crude oil gained to a two- month high in New York, pushing the UBS Bloomberg Constant Maturity Commodity index of 26 raw materials up 1.7 percent. Australian government bonds fell for a third day. The yield on the benchmark 10-year note rose seven basis points, or 0.07 percentage point, to 4.37 percent, according to data compiled by Bloomberg. The price of the 5.25 percent security due March 2019 slipped 0.547, or A$5.47 per A$1,000 face amount, to 107.102. New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, rose to 3.54 percent from 3.51 yesterday.

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