Bloomberg News

Australian, N.Z. Dollars Gain as Greek Compromise Boosts Risk

June 17, 2011

June 17 (Bloomberg) -- The Australia and New Zealand dollars snapped two days of losses after German Chancellor Angela Merkel agreed to compromise and work with the European Central Bank on a debt plan for Greece, bolstering demand for riskier assets.

New Zealand’s currency pared its biggest weekly loss since the five days ended May 6. The Australian dollar posted its largest weekly gain in a month against the U.S. currency after China’s industrial output increased.

“Germany has backed down and they won’t be formally asking for any private sector contribution to Greece and we can see better risk sentiment,” said Charles St-Arnaud, a foreign- exchange strategist at Nomura Holdings Inc. in New York. “The Australian dollar gained this week on growth in China may not be slowing as fast as some had expected.”

Australia’s dollar gained 0.4 percent to $1.0596 at 1:27 p.m. p.m. in New York from $1.0558 yesterday. It headed for a 0.5 percent weekly advance against the U.S. currency, even after it slipped to a three week low on June 16. The currency slid 0.2 percent to 84.94 yen.

New Zealand’s dollar appreciated 0.7 percent to 81.05 U.S. cents, paring this week’s decline to 1.3 percent. The so-called kiwi traded little changed at 64.97 yen from 64.89 yen.

French President Nicolas Sarkozy said a “breakthrough” had been made on the Greek debt crisis, following a meeting with Merkel, who said she’ll work with the European Central Bank to avoid disrupting markets.

Chinese Production

Chinese industrial production increased 13.2 percent last month, more than economists forecast, and retail sales rose 16.9 percent, the statistics bureau reported. The consumer-price index gained 5.5 percent, matching economists’ median forecast in a Bloomberg survey. Lenders were ordered to set aside more cash as reserves.

Gains in the higher-yielding South Pacific nation currencies were capped as weaker-than expected U.S. data spurred speculation the recovery it the world’s largest economy is faltering.

Confidence among U.S. consumers fell this month more than forecast as the Thomson Reuters/University of Michigan preliminary index of consumer sentiment decreased to 71.8, from 74.3 in May. The median forecast of economists in a Bloomberg News survey was for a reading of 74.

“The twin concern of markets at present was again at the fore -- Greece and the poor run of U.S. data,” Khoon Goh, head of market economics and strategy at ANZ National Bank Ltd. in Wellington, wrote in a note to clients.

--With assistance from Monami Yui in Tokyo. Editors: Naoto Hosoda, Dave Liedtka

To contact the reporters on this story: Allison Bennett in New York at abennett23@bloomberg.net; Cecile Vannucci in New York at cvannucci1@bloomberg.net

To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net


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