Australia’s dollar rose against most of its major counterparts as speculation the Greek parliament will approve a package of austerity measures today boosted demand for higher-yielding assets. The so-called Aussie advanced a second day against the U.S. currency as traders pared bets on a cut in the nation’s key interest rate. New Zealand’s currency strengthened as Asian stocks rallied. Gains in the two South Pacific nations’ dollars were tempered amid concern Europe will still struggle to contain its sovereign debt woes. “We might see a modest rally in the Aussie,” said Greg Gibbs, a currency strategist at Royal Bank of Scotland Group Plc in Sydney. “The risk is that the confidence surrounding the European financial system will fade rather quickly and the Aussie will trade back down.” Australia’s dollar climbed to $1.0586 as of 5:06 p.m. in Sydney from $1.0541 in New York yesterday, when it gained 0.9 percent. The currency rose 0.3 percent to 85.79 yen, after increasing to 85.81 yen, the highest since June 15. New Zealand’s dollar advanced 0.2 percent to 81.40 U.S. cents, and appreciated 0.1 percent to 65.98 yen. Greece’s parliament votes in Athens on Prime Minister George Papandreou’s 78 billion-euro ($112 billion) austerity plan, which is needed before the cash-strapped nation can gain a fifth installment from last year’s 110 billion-euro rescue and euro-area finance ministers can approve a second aid package. New Aid “Investors bought into equities, commodities and risk currencies, based on a belief that the passing of the proposed austerity measures would see a large degree of fear and anxiety dissipate from investors’ psyche,” Chris Weston, senior dealer at IG Markets in Melbourne, wrote in a note to clients today. The MSCI Asia Pacific Index of stocks rose 1.2 percent. As Papandreou works toward an agreement, German finance ministry officials will meet with banks and insurers in Berlin today. The talks are part of Europe-wide efforts to get creditors to share the burden of a second Greek bailout and prevent the euro-region’s first default. The Australian dollar will end the year at $1.04, according to the median forecast in a Bloomberg News survey, while New Zealand’s dollar will fall to 79 U.S. cents. The Aussie also advanced as traders pared bets for a cut in the nation’s benchmark rate. A Credit Suisse AG index based on swaps showed wagers on a nine-basis-point reduction to Australia’s 4.75 percent benchmark rate over 12 months, down from 20 basis points yesterday. “Interest rate markets have calmed down a bit,” Adrian Foster, head of financial-market research for Asia at Rabobank Groep NV in Hong Kong, wrote in a note to clients. The RBA is more likely to hike than cut in the next three months, he wrote. Australia’s benchmark 10-year bond yield rose 12 basis points, or 0.12 percentage point, to 5.19 percent. That was the biggest gain this year. To contact the reporter on this story: Candice Zachariahs in Sydney at czachariahs2@bloomberg.net To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net

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