By Candice Zachariahs
March 10 (Bloomberg) -- The Australian dollar rose from a one-week low as stock gains revived demand for the currency. New Zealand’s dollar slipped on speculation policy makers will cut the country’s interest rates from a record low.
Australia’s currency also climbed as a gauge of commodities shipping costs yesterday advanced to the highest since Oct. 9. Gains in the currency were limited before a report this week economists say will show unemployment climbed to the highest since April 2006. The Reserve Bank of New Zealand may reduce borrowing costs the same day, according to a Bloomberg survey.
“The equity market has recovered nicely after a big sell- off at the open, helping the Australian dollar,” said Jim Vrondas, manager of corporate business at online foreign- exchange dealer OzForex Ltd. in Sydney. The currency “will likely face stiff resistance around the 64 U.S.-cent mark,” he said.
Australia’s dollar fell as low as 63.07 U.S. cents, the weakest since March 4, before trading 0.6 percent higher at 63.86 cents as of 4:34 p.m. in Sydney from 63.49 cents late in Asia yesterday. The currency rose 0.5 percent to 63.12 yen.
New Zealand’s dollar slid as low as 49.15 U.S. cents, also the weakest since March 4, before trading down 0.1 percent at 49.72 cents. It bought 49.15 yen from 49.24.
Australia’s S&P/ASX 200 Index advanced for a second day after earlier falling as much as 1 percent. The Baltic Dry index rose for a seventh day yesterday, signaling there may be stronger demand for commodities that account for more than half of Australia’s exports.
Interest Rates
The Australian and New Zealand dollars earlier weakened as U.S. stocks yesterday extended the worst weekly slump in the Standard & Poor’s 500 Index since November, after Warren Buffett said the economy “has fallen off a cliff.”
New Zealand’s dollar may extend losses before a meeting where economists estimate the central bank will lowers rates by at least half a percentage point to 3 percent, according to a survey of 13 analysts by Bloomberg News. Australia’s central bank held rates unchanged at 3.25 percent on March 3.
The “real vulnerability” for New Zealand’s dollar is if it falls through 49.10 cents, “opening up further downside towards 47.50,” said Amy Auster, head of foreign-exchange and international economics research at Australia & New Zealand Banking Group Ltd. in Melbourne.
Higher interest rates in Australia and New Zealand, compared with as low as zero in the U.S. and 0.1 percent in Japan, attract investors to the South Pacific nations’ assets. The risk is currency market moves will erase profits.
Jobs, Sentiment
Australia’s dollar earlier fell after reports showed business confidence held near an all-time low in February and job-vacancy advertisements dropped by a record.
The number of people employed probably fell by 20,000 and the unemployment rate likely rose to 5 percent in February, according to economists surveyed by Bloomberg News before the March 12 reports.
Australian government bonds fell for the first day in three. The yield on 10-year notes rose 15 basis points, or 0.15 percentage point, to 4.26 percent, according to data compiled by Bloomberg. The price of the 5.25 percent security due March 2019 slipped 1.25, or A$12.50 per A$1,000 face amount, to 107.97.
New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, fell to 3.16 percent from 3.18 yesterday.
To contact the reporter on this story: Candice Zachariahs in Sydney at czachariahs2@bloomberg.net
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