By Candice Zachariahs
Feb. 4 (Bloomberg) -- The Australian dollar jumped the most in a month as U.S. equities gained and a A$42 billion ($27 billion) government stimulus package boosted investor appetite for the nation’s assets. New Zealand’s currency also rose.
Australia’s currency also gained after the central bank cut interest rates to the lowest since 1964 yesterday to boost demand and the Treasury said its plan would help the economy grow 1 percent in the 12 months to June 30. The South Pacific nations’ currencies advanced as prices of commodities, which account for more than half their exports, ended three days of losses.
“Australian sentiment has definitely been buoyed by yesterday’s announcement, both on the monetary and fiscal side,” said Danica Hampton, a currency strategist at Bank of New Zealand Ltd. in Wellington. “The currency may inch back towards 67 cents over the next couple of days.”
Australia’s currency rose as much as 3.1 percent to 65.46 U.S. cents, the biggest gain since Dec. 17, and traded at 64.83 cents as of 12:23 p.m. in Sydney, from 63.49 cents late in Asia yesterday. The currency advanced 2 percent to 57.97 yen.
New Zealand’s dollar gained 1.6 percent to 51.02 U.S. cents from 50.22 in Asia yesterday. It bought 45.63 yen from 44.95.
Equities, Commodities
The currencies advanced as U.S. equities gained for the first time in four days on better-than-estimated earnings at Merck & Co and Schering-Plough Corp. The UBS Bloomberg Constant Maturity Commodity index of 26 products advanced 0.6 percent as crude oil, Australia’s fourth most valuable raw material export, rose as production cuts by the Organization of Petroleum Exporting Countries may reduce inventories.
China, Australia’s biggest trading partner, is considering a stimulus plan for the petrochemicals industry, an official at the state-backed China Petroleum and Chemical Industry Association said yesterday.
Australia’s dollar advanced for a third day against New Zealand’s as Auckland-based Fonterra Cooperative Group Ltd., the world’s biggest dairy exporter, said near-term whole milk powder auction prices extended declines amid slowing global demand.
Prices slumped in six of the seven preceding auctions and are down 58 percent since the company began monthly sales in July. New Zealand’s currency traded at NZ$1.2699 per Australian dollar.
Investors should buy Australia’s dollar if it declines against the New Zealand currency as short-term dips probably will be followed by advances toward the 2008 peak of NZ$1.2965, RBC Capital Markets said.
Investors should exit such trades if the Australian currency closes below NZ$1.1989, analysts led by George Davis, Toronto- based chief technical analyst at RBC, said in a note to clients yesterday.
To contact the reporter on this story: Candice Zachariahs in Sydney at czachariahs2@bloomberg.net
Posts
No comments:
Post a Comment