Australian, N.Z. Dollars Advance as Stocks Gain on Auto Rescue

By Candice Zachariahs

Dec. 8 (Bloomberg) -- The Australian and New Zealand dollars rose as stocks in the region gained amid reports U.S. lawmakers may agree to rescue automakers, spurring investors to buy high-yielding assets.

The currencies extended gains from Dec. 5 after U.S. President-elect Barack Obama on the weekend pledged the biggest public works program in about 50 years to help fuel growth in the world’s biggest economy. Australia’s dollar strengthened the most in two weeks against the U.S. currency and the yen after S&P/ASX 200 Index climbed the most in a week and Japan’s Nikkei 225 rose the this month.

“The equity market’s rebound is encouraging the Aussie up,” said Joe Capurso, a currency strategist in Sydney at Commonwealth Bank of Australia Ltd., the nation’s biggest mortgage lender. “The reality is that the world economy is in very poor shape and that’s typically bad news for the Aussie,” he said, referring to the currency by its nickname.

Australia’s currency gained 1.3 percent to 65.49 U.S. cents as of 5:09 p.m. in Sydney, from 64.67 cents in New York late last week. The currency rose 1.3 percent to 60.82 yen.

New Zealand’s dollar advanced 0.5 percent to 53.60 U.S. cents from 53.32 cents in New York. It bought 49.83 yen.

The currencies advanced as U.S. lawmakers approached agreement on bridge loans for General Motors Corp. and Chrysler LLC to help the automakers survive this month. President-elect Obama said at a press conference in Chicago on Dec. 6 that he will boost investment in roads, bridges and public buildings to create and preserve 2.5 million jobs.

Exporters to Benefit

The New Zealand dollar’s gains were tempered after Prime Minister John Key yesterday said exporters would benefit as the kiwi, as the currency is called, may drop below 50 U.S. cents.

The kiwi “will print a four in front of it at some point against the U.S. dollar, and probably a seven when it comes to the Australian cross rate,” Key said on Television New Zealand’s Agenda Program. The currency fell 0.6 percent to 81.99 Australian cents and touched 81.49, the lowest since Sept. 26.

“The market’s priced in that, over a several-month horizon, the kiwi is going to be weaker,” said Imre Speizer, a market strategist in Wellington with Westpac Banking Corp. “It’s slightly unusual the Prime Minister said it.”

Westpac forecasts that New Zealand’s dollar will bottom at close to 45 U.S. cents in the first quarter and then climb to about 56 cents by the end of 2009. It will fall to a low of 80 Australian cents by the middle of next year, the bank said.

Jobs Report

Gains in the Australian dollar may also be limited this week before a report that economists say will show the number of people employed fell 15,000, according to a Bloomberg News survey. The unemployment rate is forecast to rise to 4.4 percent, the highest since November 2007, from 4.3 percent. The statistics bureau will release the report on Dec. 11.

Australian job-vacancy advertisements fell for a seventh month in November, led by a record drop in newspaper notices, according to an Australia & New Zealand Banking Group Ltd. report released today in Melbourne. Newspaper ads fell over the last two months by the most in the 30-year history of the survey, the bank said.

Futures traders increased their bets that the Australian dollar will decline against the greenback, figures from the Washington-based Commodity Futures Trading Commission show. The difference in the number of wagers by hedge funds and other large speculators on a decline in the Australian currency compared with those on a gain -- so-called net shorts -- was 9,878 on Dec. 2, compared with net shorts of 8,624 a week ago.

Australian government bonds declined. The yield on the 10- year note rose 2 basis points, or 0.02 percentage point, to 4.3 percent, according to data compiled by Bloomberg. The price of the 5.25 percent security due March 2019 fell 0.135, or A$1.35 per A$1,000 face amount, to 107.832.

New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, declined to 4.75 percent from 4.78 on Dec. 5.

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