The Australian and New Zealand dollars rose to the highest since October, heading for a third month of gains, as investor confidence in a global recovery buoyed purchases of higher-yielding assets. The currencies advanced this week against the greenback as Standard & Poor’s raised the outlook on New Zealand’s sovereign debt rating to stable and concern grew over the creditworthiness of the U.S. government. Prices of commodities, which account for more than half the South Pacific nations’ exports, climbed 12 percent this month, the most since 1974, Bloomberg data show. “The main game is whether the global economy will recover by year-end, led by China,” said John Kyriakopoulos, head of currency strategy at National Australia Bank Ltd. in Sydney. “Key resistance is at 79.30 U.S. cents for the Australian dollar and we suspect that a fresh catalyst is needed to charge higher.” Australia’s currency has gained 8.6 percent this month, rising to as high as 79.16 U.S. cents today, the strongest since Oct. 2, before trading at 78.93 cents at 3 p.m. in Sydney, from 78.40 yesterday in New York. The currency advanced for a fourth month versus the yen, adding 7.3 percent in May to 76.18 yen. New Zealand’s dollar rose to as high as 62.88 U.S. cents, the most since Oct. 14, from 62.33 cents yesterday. It climbed 9.6 percent against the dollar this month, while advancing 8.3 percent to 60.62 yen. The Australian dollar will find “solid” support at 77 cents “while the Standard & Poor’s 500 refuses to break lower,” Kyriakopoulos said. Equities, Commodities Bank lending in Australia increased in April for a fourth month adding to signs that record low interest rates and government handouts are spurring demand. Loans provided by banks and other finance companies climbed 0.1 percent from March, the Reserve Bank of Australia said in Sydney today. The currencies also strengthened after Japan’s industrial output rose 5.2 percent in April, the most in 56 years and faster than the 3.3 percent economists forecast. New Zealand’s dollar is the second-best performer this month among the most-active currencies against the U.S. dollar and yen after Finance Minister Bill English yesterday unveiled a budget that deferred tax cuts to avert the threat of a credit- rating cut that would have driven borrowing costs higher and delayed a recovery from the worst recession in three decades. Australia’s dollar is the third-biggest gainer versus the U.S. and Japanese currencies in May as the S&P 500 stock index added 3.9 percent since April 30 for a third straight monthly advance. Asian stocks are poised for the longest streak of monthly gains since the credit crisis began in 2007. Record Advance The Reuters/Jefferies CRB Index of 19 raw materials has also strengthened on optimism about a recovery in China, Australia’s biggest trading partner. China’s growth prospects improved from three months ago, with economists in a Bloomberg News survey forecasting 7.5 percent growth this year. New Zealand’s dollar may extend its record three-month gains and advance toward 65 U.S. cents, Niall O’Connor, a New York-based currency analyst at JPMorgan Chase & Co., wrote in a note today. Home-building approvals rose in April for the second time in three months, a sign New Zealand’s worst recession in more than three decades is abating. Permits climbed 11.2 percent from March, Statistics New Zealand said, citing seasonally adjusted figures. Australia today sold A$698 million ($549 million) of securities maturing April 2012 at a weighted average yield of 3.98 percent. The so-called bid-to-cover ratio at the auction was 4.6. Australian government bonds advanced for a second day. The yield on 10-year notes fell four basis points, or 0.04 percentage point, to 5.32 percent, according to data compiled by Bloomberg. The price of the 5.25 percent security due March 2019 rose 0.33, or A$3.30 per A$1,000 face amount, to 99.49. New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, fell for a second day to 3.51 percent from 3.54 yesterday.

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