BLBG: Australian Dollar Holds Near Three-Week High as Europe Debt Crisis Eases
The Australian dollar traded 0.7 percent from a three-week high on waning concern that the European sovereign-debt crisis will drag down demand for higher- yielding assets.
The so-called Aussie pared its weekly loss after people with knowledge of the situation said Grupo Modelo SAB de CV (GMODELOC) and Molson Coors Brewing Co. (TAP) have been exploring a possible joint bid for Australia’s Foster’s Group Ltd. (FGL) New Zealand’s dollar held yesterday’s advance before a report that may show U.S. companies hired fewer workers in May, backing the case for the Federal Reserve to keep interest rates near zero and preserving the yield advantage of assets in the South Pacific nation.
“There’s a bit of easing in worries over the debt crisis in Europe,” said Lee Wai Tuck, a currency strategist at Forecast Pte in Singapore. “The bias is for commodity currencies such as the Aussie to be bought.”
Australia’s dollar traded at $1.0676 as of 3:20 p.m. in Sydney from $1.0670 in New York yesterday, after reaching $1.0758 on May 31, the highest level since May 11. It was set for a 0.3 percent weekly decline. The Aussie was at 86.16 yen from 86.31 yen.
New Zealand’s dollar bought 81.54 U.S. cents from 81.55 cents. The so-called kiwi traded at 65.81 yen from 65.97 yen.
Benchmark rates are 4.75 percent in Australia 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.
EU, IMF
European Union and International Monetary Fund officials will today complete a review of Greece’s plan for 78 billion euros ($113 billion) in asset sales and austerity measures as they prepare the country’s second bailout.
Greek Prime Minister George Papandreou will discuss the findings at 3 p.m. local time on a visit to his Luxembourg counterpart Jean-Claude Juncker, who leads the group of euro- area finance ministers. Papandreou is promising 6.4 billion euros of spending cuts this year, another 22 billion euros up to 2015, and 50 billion euros in sales of assets including Hellenic Telecommunications Organization SA and Public Power Corp SA.
Australia’s dollar was supported as people, who declined to be identified because the matter is private, said Grupo Modelo and Molson Coors Brewing are working with banks on lining up financing for a potential purchase of Foster’s.
“Aussie is back up, maybe because of the M&A that’s being talked about,” Lee said.
New Zealand Dollar
New Zealand dollar pared its weekly loss to 0.4 percent as economists surveyed by Bloomberg News said the Labor Department may say today that U.S. jobs growth slowed to 165,000 new employees in May from 244,000 in April.
The slowing in the U.S. economic recovery may spur Fed policy makers to consider ways to stimulate growth after their program for $600 billion of assets purchases ends this month.
“Growth worries are weighing on the U.S. dollar as talk of another round of quantitative easing mounts,” Janu Chan, an economist in Sydney at St. George Bank Ltd., wrote in a research note today.
The Fed began its second round of asset purchases, known as QE2, in November after buying $1.7 trillion in securities through last year, increasing the amount of money in circulation to prevent deflation.
To contact the reporter on this story: Ronnie Harui in Singapore at rharui@bloomberg.net
To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net
