Australian, N.Z. Dollars Rise to January Highs on G-20 Pledges

By Candice Zachariahs

April 3 (Bloomberg) -- The Australian and New Zealand dollars rose for the fifth week, trading near the highest since January, as commodities and equities gained after world leaders pledged more than $1 trillion of aid to fight the global slump.

The Australian dollar strengthened to the most since October against the yen as leaders of the Group of the 20 nations tripled the firepower of the International Monetary Fund, which has been inundated with requests for loans from troubled economies including Hungary. The South Pacific nations’ currencies also gained after China, Australia’s largest trading partner, said yesterday the nation’s manufacturing is expanding.

“The G-20 giving the IMF all that extra money means they’re going to have a go at fixing the issues in Eastern Europe,” said Tony Allen, head of currency trading at ANZ National Bank Ltd. in Wellington. “Aussie’s got very little downside and it could target 76 U.S. cents by the end of the month,” he said referring to the currency by its nickname.

Australia’s currency advanced for a fourth day, rising 0.2 percent to 71.64 U.S. cents as of 12:29 p.m. in Sydney, from 71.52 cents late in New York yesterday. It touched 72.29 cents, close to the highest since Jan. 7. The currency gained 1.2 percent to 72.01 yen, trading near the strongest since October.

New Zealand’s dollar advanced 1.3 percent to 58.53 U.S. cents and reached as high as 59 cents, near the strongest since Jan. 12, from 57.76 in New York yesterday. It bought 58.92 yen and touched 59.03, the most since Nov. 10.

New Zealand’s currency may trade between 55.50 U.S. cents and 59 cents through April, Allen said.

IMF War Chest

The IMF was told its war chest will be boosted by $500 billion and it will receive another $250 billion in special drawing rights, the agency’s synthetic currency. Multilateral development banks including the World Bank will be enabled to lend at least $100 billion more.

The currencies gained as the UBS Bloomberg Constant Maturity Commodity Index rose the most in two weeks after crude oil and copper rose on speculation the worst of the slowdown is over. Asian equities extended a global equity rally after the Standard & Poor’s 500 Index advanced the most since March 23.

China’s Purchasing Manager’s Index rose to a seasonally adjusted 52.4 in March from 49 in February, the Federation of Logistics and Purchasing said yesterday. A reading above 50 indicates an expansion.

“The rise in commodity prices in response to improved sentiment towards global economic growth is supportive of the Australian dollar,” wrote John Kyriakopoulos, Sydney-based head of currency strategy at National Australia Bank Ltd. in a note today. “The spanner in the works could come from tonight’s U.S. non-farm payrolls report for March.”

The jobless rate in the world’s largest economy probably climbed in March to a 25-year high of 8.5 percent, according to the median estimate of 79 economists polled by Bloomberg News. The Australian dollar will find sellers at 72 U.S. cents and then 72.50 cents, wrote Kyriakopoulos.

Deficit, Bond Sales

Australia’s services industry shrank last month at a slower pace, with an index rising 3.4 points from February to 35.6, Commonwealth Bank of Australia and the Australian Industry Group said in Sydney today. The index was below 50 for a 12th month, indicating the sector is contracting.

In New Zealand, the cash budget deficit was wider than the government forecast at the end of February amid slumping tax receipts. It was NZ$6.61 billion ($3.8 billion) in the eight months ended Feb. 28, or NZ$1.71 billion wider than previously forecast, the Treasury Department said today. Tax receipts were NZ$1.86 billion less than forecast.

Australia today sold A$599 million ($430 million) of securities maturing May 2013 at a weighted average yield of 3.84 percent. The so-called bid-to-cover ratio at the auction was 3.4.

Australian government bonds snapped four days of gains. The yield on 10-year notes rose six basis points, or 0.06 percentage point, to 4.43 percent, according to data compiled by Bloomberg. The price of the 5.25 percent security due March 2019 slipped 0.48, or A$4.80 per A$1,000 face amount, to 106.51.

New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, rose to 3.92 percent from 3.84 yesterday.

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