BLBG:Aussie, New Zealand Dollars Rise as Stocks Gain Before ECB Loan Results
The Australian and New Zealand dollars reached one-week highs as Asian equities extended a global stocks rally, boosting demand for higher-yielding assets.
The so-called Aussie gained for a second day before the European Central Bank announces results of its first tranche of unlimited three-year loans amid speculation the facility is spurring purchases of the region’s sovereign debt. Demand for New Zealand’s currency was limited after a report showed the country’s current-account deficit widened.
“It certainly feels like the risk-on appetite will continue throughout the course of Asian session today,” said Matt Brady, executive director for foreign exchange at JPMorgan Chase & Co. in Sydney. “For the Aussie, it will be a gradual grind higher.”
The Australian dollar touched $1.0136, the most since Dec. 13, before trading at $1.0117 at 3:09 p.m. in Sydney, 0.4 percent above yesterday’s close in New York. The currency advanced 0.2 percent to 78.69 yen after earlier reaching 78.87, also the highest since Dec. 13.
New Zealand’s dollar added 0.4 percent to 77.06 U.S. cents. It earlier rose to 77.20 cents, the most since Dec. 12. The so- called kiwi rose 0.2 percent to 59.95 yen.
Australia’s government bonds declined, pushing the yield on the 10-year security up five basis points, or 0.05 percentage point, to 3.78 percent. Three-year bond yields rose nine basis points to 3.11 percent.
The MSCI Asia Pacific Index (MXAP) of stocks rose 1.9 percent. The Standard & Poor’s 500 Index added 3 percent yesterday, its biggest gain this month.
ECB Loans
Italian and Spanish two-year rates have slipped more than one percentage point since ECB President Mario Draghi announced the unprecedented loans on Dec. 8 as investors bet that banks will use the cash to buy government debt.
Economists forecast banks would seek 293 billion euros ($383 billion), according to the median of 14 estimates in a Bloomberg News survey. Results will be announced today and the loans will start tomorrow.
“Take up is expected to be strong” for the loans, Geoffrey Yu, currency strategist at UBS AG in London, said in a note to clients. “Markets would interpret this as positive.”
UBS expects the Australian dollar to rise to $1.04 in one month and New Zealand’s currency to advance to 80 U.S. cents in the same time period.
Gains in the New Zealand dollar were limited after a report showed the country’s current-account deficit widened by more than economists had forecast.
Current Account
The shortfall was 4.3 percent of gross domestic product in the year ended Sept. 30, from 3.7 percent in the 12 months through June, Statistics New Zealand said in Wellington today. Economists predicted a 3.9 percent gap, according to the median of 11 forecasts in a Bloomberg News survey.
“We had a negative piece of data in the form of a larger- than-expected third-quarter current-account deficit, and that’s taken a little bit of wind out of the kiwi dollar’s sails,” said Mike Jones, a currency strategist at Bank of New Zealand Ltd. in Wellington.
The Australian dollar has fallen 1.1 percent against its U.S. counterpart since the end of last year, while the kiwi has dropped 1.2 percent.
To contact the reporter on this story: Mariko Ishikawa in Tokyo at mishikawa9@bloomberg.net
To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net
