Australian, N.Z. Dollars Rise as Charts Signal Losses Excessive

By Ron Harui

Aug. 4 (Bloomberg) -- The Australian dollar rose from a three-month low and the New Zealand dollar climbed from near its lowest in 10 months after technical charts signaled their more than 2 percent losses of the past week were excessive.

Australia's dollar snapped a four-day losing streak as the currency's 14-day stochastic oscillator, a technical indicator which measures momentum, declined to 6.89, according to data compiled by Bloomberg. New Zealand's dollar also strengthened as its 14-day stochastic oscillator touched 7.95. A level below 20 suggests a currency may have weakened too quickly and is poised to rebound.

``The Aussie and the kiwi are looking oversold on the charts,'' said Lee Wai Tuck, a foreign-exchange strategist at Forecast Pte based in Singapore, referring to the two currencies by their nicknames. ``We could see some buying of both currencies today.''

The Australian dollar advanced to 93.19 U.S. cents as of 3:29 p.m. in Sydney from 92.93 cents late in New York on Aug. 1. It earlier reached 92.86 cents, matching a three-month low touched Aug. 1. The currency gained to 100.44 yen from 100.07 yen. Trading volumes may be lower than normal today because of a bank holiday in New South Wales, Australia's most populous state.

The New Zealand dollar strengthened to 72.86 U.S. cents from 72.73 cents late in New York on Aug. 1, when it reached 72.47 cents, the weakest since Sept. 19. The currency rose to 78.53 yen from 78.32 yen.

Australia's currency fell earlier on speculation policy makers meeting to review interest rates tomorrow will signal they are moving toward cutting borrowing costs to spur growth. New Zealand's currency had declined after a government report showed wages rose less than economists forecast, adding to evidence the economy stalled in the first half of 2008.

`Soft' Data

``There's a combination of soft economic data out of Australia as well as expectations that there will be interest- rate cuts,'' said Paul Koopmans, corporate risk manager in Melbourne at Custom House, a foreign-exchange broker.

Australian house prices fell in the second quarter for the first time in almost three years, the Bureau of Statistics said today. A separate government report on Aug. 7 may show job growth slowed to 5,000 in July from 29,800 in June, according to a Bloomberg News survey of economists.

``Talk of rate cuts will cost the Aussie dearly,'' Peter Pontikis, a treasury strategist at Suncorp-Metway Ltd. in Brisbane, Australia, wrote in a note to clients. ``The pressure is on the Australian dollar to fall to earth and back to more reasonable support at just below 90 U.S. cents.''

The Reserve Bank of Australia will keep its benchmark rate at 7.25 percent tomorrow, according to all 24 economists surveyed by Bloomberg. Investors expect the RBA will cut borrowing costs by 68 basis points in the next year, compared with 29 basis points a week earlier, according to a Credit Suisse Group index based on trading in interest-rate swaps.

Benchmark rates of 7.25 percent in Australia and 8 percent in New Zealand compare with 2 percent in the U.S. and 0.5 percent in Japan, which has made the two South Pacific currencies popular targets for international investors.

To contact the reporter on this story: Ron Harui in Singapore at rharui@bloomberg.net.