BLBG:Aussie Dollar Holds Gain on China Manufacturing Data; N.Z. Dollar Weakens
The Australian dollar maintained a gain from yesterday after a report showed manufacturing unexpectedly expanded last month in China, the South Pacific nation’s biggest trading partner.
Demand for the so-called Aussie was supported after a purchasing managers’ index for Chinese manufacturing rose to 50.5 from 50.3 in December, above the level of 50 that marks the division between contraction and expansion. New Zealand’s dollar, nicknamed the kiwi, slid as Asian stocks fell. Demand for both currencies was limited on speculation U.S. jobs data will point to a slowing recovery in the world’s largest economy, reducing demand for higher-yielding assets.
“The knee-jerk reaction to the Chinese data was very positive,” said Callum Henderson, global head of foreign- exchange research in Singapore at Standard Chartered Plc. “The fact that it’s still an expansion is positive for higher beta currencies, particularly the Aussie.”
Australia’s dollar was at $1.0607 as of 4:41 p.m. in Sydney after gaining 0.2 percent to $1.0621 yesterday. The Aussie traded at 80.82 yen from 81. New Zealand’s currency fell 0.4 percent to 82.34 U.S. cents. The kiwi dropped 0.5 percent to 62.75 yen.
Australian 10-year bonds rallied, pushing yields down four basis points, or 0.04 percentage point, to 3.68 percent. It earlier fell to 3.648 percent, matching the record low reached on Dec. 30. New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, climbed one basis point to 2.74 percent.
The MSCI Asia Pacific Index (DMXAP) lost 0.2 percent after earlier rising as much as 0.3 percent.
China Policy Outlook
The reading for China’s manufacturing gauge compares with a median estimate of 49.6 in a Bloomberg News survey of economists.
Standard Chartered’s Henderson said he’s “relatively bearish” on the Aussie for the first half of this year.
China’s “good data will only exacerbate the gradualism of policy easing,” he said. “At some stage that may be a negative for markets.”
Australian house prices plunged by the most on record in 2011, figures from the statistics bureau showed today. Sales of newly built homes dropped in December after a revised 4.4 percent gain the previous month, according to a separate report from the Canberra-based Housing Industry Association.
U.S. Economy
The South Pacific currencies failed to extend gains from yesterday amid a moderation in economic data out of the U.S., adding to speculation investors will flock to safer assets.
ADP Employer Services may say companies in the U.S. added 182,000 workers in January from 325,000 in December, according to the median estimate in a Bloomberg poll before today’s figures. Reports from yesterday showed a gauge of consumer confidence dropped last month, while an index of business activity fell in the same period.
“We’ve had quite a strong run from U.S. data of late, but there are a few straws in the wind that suggest momentum is cooling,” said Mike Jones, a currency strategist at Bank of New Zealand in Wellington. “It’s perhaps just another headwind for the likes of kiwi and Aussie if we do see more of a safe haven bid underpin the U.S. dollar.”
To contact the reporter on this story: Kristine Aquino in Singapore at kaquino1@bloomberg.net
To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net
