July 20 (Bloomberg) -- The Australian and New Zealand dollars rose to at least the highest levels in more than two weeks against the yen and dollar as global stocks and commodities climbed, spurring demand for higher-yielding assets. The South Pacific nations’ currencies extended last week’s gains of more than 4 percent versus Japan’s currency that came after profits at Goldman Sachs Group Inc. posted record earnings. The Australian dollar also rose as the premium investors get from two-year government debt over U.S. Treasuries of comparable maturity increased to the widest since October. “We’ve had a strong start to equities in the lead-up to some more company reports, which have been beating analyst expectations,” said Ian Fowler, a senior dealer at the online foreign-exchange firm OzForex Ltd. in Sydney. “We’ve also seen commodity prices performing well, which is good for the Aussie.” Australia’s currency gained as much as 1.9 percent to 77.02 yen, the highest level since July 2, before trading at 76.74 at 2:09 p.m. in New York, compared with 75.57 on July 17. The Aussie advanced as much as 1.6 percent to 81.52 U.S. cents, the highest since June 30. New Zealand’s dollar rose as much as 1.8 percent to 65.65 U.S. cents, the strongest level since June 3, and gained as much as 2.2 percent to 62.06 yen, the highest since July 1. Australia’s dollar may rise toward 77 yen, according to Fowler. Bonds Slump Asian stocks and Australia’s S&P/ASX 200 Index advanced for a fifth day. Prices of commodities, which account for more than half of Australia’s and New Zealand’s exports, also gained as crude oil rose as much as 2.1 percent to $63.77 a barrel. Oil is Australia’s fourth-most valuable export. The spread offered by two-year Australian government bonds over Treasuries increased to 3.08 percentage points, the widest level since October, as traders raised bets on interest rate increases by the Reserve Bank of Australia. The central bank will increase its target rate by 0.75 percentage point over the next 12 months, according to a Credit Suisse Group AG index based on swaps trading. Australian government bonds fell. The yield on 10-year notes added 17 basis points, or 0.17 percentage point, to 5.62 percent, according to data compiled by Bloomberg. The price of the 5.25 percent security due in March 2019 slipped 1.241, or A$12.41 per A$1,000 face amount, to 97.260. New Zealand’s two-year swap rate, a fixed rate made to receive floating, rose to 3.89 percent from 3.80 on July 17. Target Lending Rates Benchmark interest rates are 3 percent in Australia and 2.5 percent in New Zealand, compared with 0.1 percent in Japan and as low as zero in the U.S., attracting investors to the South Pacific nations’ higher-yielding assets. The risk in such trades is that currency market moves will erase profits. Futures traders decreased their bets that the Australian dollar will rise against the U.S. dollar last week, figures from the Washington-based Commodity Futures Trading Commission show. The difference in the number of wagers by hedge funds and other large speculators on an gain in the Australian dollar compared with those on a drop -- net longs -- was 25,593 on July 14, compared with net longs of 31,886 a week earlier. To contact the reporter on this story: Candice Zachariahs in Sydney at czachariahs2@bloomberg.net

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