The New Zealand dollar gained to a record and Australia’s advanced as investors sought alternatives to the greenback with U.S. lawmakers remaining at odds on how to raise the debt ceiling and avoid a default. The Aussie reached its highest in more than two months before a report tomorrow forecast to show the nation’s consumer price index rose in the second quarter. Central bank Governor Glenn Stevens said today Australia’s subdued household spending will likely rebound “at some point” amid a mining boom. “There’s definitely been Asian central-bank buying and that’s been one of the significant factors supporting the kiwi,” said Tim Kelleher, vice president of institutional banking and markets at Commonwealth Bank of Australia in Auckland. “The risk is probably a stronger number” for Australia’s inflation report, he said. New Zealand’s dollar rose as high as 87.08 U.S. cents, the strongest since it was freely floated in 1985, before trading at 86.93 cents as of 1:42 p.m. in Sydney from 86.41 cents in New York yesterday. It gained to 67.91 yen from 67.66 yen. Australia’s currency advanced to $1.0918, the strongest since May 3, before trading at $1.0909 from $1.0845 yesterday. The Aussie bought 85.21 yen from 84.91 yen. President Barack Obama said in a prime-time address from the White House that the nation’s burgeoning debt threatens to do “serious” damage to the U.S. economy and that Congress must compromise to address future deficits. U.S. Stalemate Obama called on lawmakers to put politics aside to reach a deal on a “balanced” approach and blamed the current stalemate on a group of Republicans in the House who are insisting on budget cuts and no tax increases. House Speaker John Boehner, an Ohio Republican, said in a rebuttal that Obama was asking for a “blank check.” U.S. Treasury Secretary Timothy F. Geithner has said the government will run out of options to prevent a default on Aug. 2 unless the debt ceiling is increased. The Aussie rose against 10 of its 16 most-traded counterparts before an inflation report tomorrow which the Reserve Bank has said will be important in helping to shape the future path of borrowing costs in the country. Australia’s consumer prices increased 3.4 percent in the second quarter from a year earlier, according to the median estimate of economists in a Bloomberg News survey. The Bureau of Statistics will release the figures tomorrow. Export Growth New Zealand’s currency earlier declined against the yen after the statistic bureau said the nation’s trade surplus narrowed as exports fell to a five-month low. Exports exceeded imports by NZ$230 million ($198 million), down from a revised NZ$551 million surplus in May, Statistics New Zealand said in Wellington. The median estimate in a Bloomberg News survey was for a NZ$400 million surplus. Traders are betting that the Reserve Bank of New Zealand will increase it official cash rate by 99 basis points over the next 12 months. Policy makers next meet on July 28. Benchmark rates are 2.5 percent in New Zealand and 4.75 percent in Australia, compared with as low as zero in the U.S. and Japan, attracting investors to the South Pacific nations’ higher-yielding assets. The risk in such trades is that currency market moves will erase profits. 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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