Australian, N.Z. Dollars Near 1-Month High Before RBA Minutes

By Candice Zachariahs

March 17 (Bloomberg) -- The Australian and New Zealand dollars traded near the strongest in a month before the Reserve Bank of Australia releases minutes of the meeting where it halted the nation’s most aggressive cycle of interest rate cuts.

The currencies traded close to two-month highs versus the yen as traders yesterday pared bets the RBA will lower its benchmark by 50 basis points, or 0.5 percentage point, when it meets April 7. They also rose as prices of commodities, which account for more than half of the two nations’ exports, advanced for a third session.

“Markets may get a sense that RBA strategy is relatively comfortable going into the pause,” said Tony Morriss, a senior markets strategist at Australia & New Zealand Banking Group Ltd. in Sydney. “In recent days, with better stock market performance, the market seems to be moving away from pricing a full 50 basis point cut at the next meeting.”

Australia’s currency rose 0.1 percent to 65.95 U.S. cents as of 8:29 a.m. in Sydney, near a one-month high of 66.38 cents touched yesterday. The currency advanced 0.1 percent to 64.77 yen from 64.71 yen late in New York yesterday.

New Zealand’s dollar gained 0.1 percent to 53.04 U.S. cents from 52.99 cents late in New York yesterday, when it touched 53.40 cents, the highest since Feb. 10. It bought 52.09 yen from 52.02 yen.

The Australian dollar is likely to find buyers at 65.50 U.S. cents and struggle to get above 66.40 cents, Morriss said.

RBA Governor Glenn Stevens held benchmark rates at 3.25 percent on March 3 after 4 percentage points of reductions since September. Traders were betting yesterday on a 71 percent chance of a cut to 2.75 percent next month, from 91 percent late last week, according to a Credit Suisse Group index based on swaps trading.

Higher interest rates in Australia and New Zealand, compared with 0.1 percent in Japan and as low as zero in the U.S., attract investors to the South Pacific nations’ higher- yielding assets. The benchmark in New Zealand is 3 percent.

The currencies also rose as crude oil gained to a two- month high in New York, pushing the UBS Bloomberg Constant Maturity Commodity index of 26 raw materials up 1.7 percent.

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