By Candice Zachariahs
Feb. 4 (Bloomberg) -- The Australian and New Zealand dollars rose for a second day as regional stocks gained and government spending worldwide boosted investor appetite for higher-yielding assets.
Australia’s currency climbed the most in almost three weeks after a government report showed December retail sales posted the biggest gain in more than eight years. The government yesterday announced a A$42 billion ($27.2 billion) spending package and the central bank cut interest rates to the lowest since 1964 to help the economy avoid a recession.
“Gains on the stock market and a weaker dollar are helping risk appetite,” said Tony Morriss, a senior markets strategist at Australia & New Zealand Banking Group Ltd. in Sydney. “Anything towards 67 cents will be difficult to sustain for the Aussie,” he said referring to the currency by its nickname.
Australia’s currency rose 2.3 percent, the most since Jan. 16, to 64.95 U.S. cents as of 4:48 p.m. in Sydney, from 63.49 cents late in Asia yesterday. The currency advanced 2.3 percent to 58.17 yen.
New Zealand’s dollar gained 2 percent to 51.20 U.S. cents from 50.22 in Asia yesterday. It bought 45.85 yen from 44.95.
The currencies advanced as Asian stocks rose for a second day and commodity prices ended three days of losses. The UBS Bloomberg Constant Maturity Commodity index of 26 products advanced 0.5 percent helped by crude oil, Australia’s fourth most valuable raw material export.
Retail Sales
Retail sales in Australia, seasonally adjusted, increased 3.8 percent from November, when they advanced 0.4 percent, the Bureau of Statistics said in Sydney today. The median forecast of 16 economists surveyed by Bloomberg News was for a 1.4 percent gain.
Home-building approvals unexpectedly fell in December for a sixth month, matching the longest run of declines in more than four years, and sales of cars and trucks tumbled 18.5 percent in January compared with the same month a year earlier, separate reports showed today.
The Reserve Bank of Australia cut its benchmark rate 1 percentage point to 3.25 percent yesterday and has now reduced the cash target 4 percentage points since early September to boost domestic demand amid slowing growth globally.
The Treasury said yesterday its stimulus plan would help the economy grow 1 percent in the 12 months to June 30. China, Australia’s biggest trading partner, is considering plans to aid oil refiners, an official at the state-backed China Petroleum and Chemical Industry Association said yesterday.
“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. Australia’s dollar may rise towards 67 cents and New Zealand’s towards 52 cents, she said.
N.Z. Spending
New Zealand will spend NZ$480 million ($247 million) over four years on reforms to business taxes aimed at reducing costs for small and medium-sized companies, Prime Minister John Key said today. The reforms include reducing the size of provisional tax payments and penalties, and raising the threshold at which companies need to file returns on sales taxes. They will be effective on April 1.
Milk Powder
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$1.2678 per Australian dollar from NZ$1.2641 yesterday.
New Zealand’s commodity export price index fell for a sixth straight month in January, led by wood pulp, logs, wool and dairy products, ANZ National Bank Ltd. said. The index dropped 4.3 percent from December, ANZ said.
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.
Australian government bonds fell for a second day with the yield on the 10-year note rising 9 basis points, or 0.09 percentage point, to 4.31 percent, according to data compiled by Bloomberg. The price of the 5.25 percent security due March 2019 slid 0.776, or A$7.76 per A$1,000 face amount, to 107.624.
New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, rose to 3.36 percent from 3.32 yesterday.
To contact the reporter on this story: Candice Zachariahs in Sydney at czachariahs2@bloomberg.net.
Posts
No comments:
Post a Comment