Australian Dollar Rises to 1-Month High, Heads for Weekly Gain

By Candice Zachariahs

Dec. 12 (Bloomberg) -- The Australian dollar touched a one- month high against the U.S. currency as Asian stocks gained this week by the most since 1990. New Zealand’s dollar also rose.

Australia’s currency headed for a weekly advance after reports showed consumer confidence increased for a second month and home loan approvals climbed in October for the first time in nine months. Gains in the South Pacific nations’ currencies may be limited on concern the U.S. Senate won’t pass a $14 billion auto industry bailout and before China reports retail sales today.

The Australian dollar’s “advance has a lot to do with improvements in risk appetite,” said Besa Deda, acting chief economist and strategist at St. George Bank Ltd. in Sydney. “I favor a weaker Aussie from here, particularly with Chinese data starting to worry policy makers and investors,” she said, referring to the currency by its nickname.

Australia’s currency touched 68.01 U.S. cents, the highest since Nov. 11, before trading at 67.18 cents as of 8:25 a.m. in Sydney, from 66.38 cents late in Asia yesterday. It has risen 3.9 percent since closing at 64.67 cents in New York late last week. The currency advanced 2.6 percent to 61.58 yen from 60.02 yen in New York on Dec. 5.

New Zealand’s dollar gained 3.4 percent to 55.14 U.S. cents from 53.32 in New York last week. It bought rose 2.1 percent to 50.55 yen.

The Australian and New Zealand dollars rose as the greenback plunged against all major currencies after the cost of borrowing in dollars dropped, indicating weaker demand for year-end funding. The cost of borrowing in dollars for three months in London fell to the lowest level since September 2004, British Bankers’ Association data showed yesterday.

To contact the reporter on this story: Candice Zachariahs in Sydney at czachariahs2@bloomberg.net