Oct. 5 (Bloomberg) -- The Australian dollar rose against the dollar and yen as stocks gained amid increasing demand for higher-yielding assets.
The Aussie fell earlier on bets the Reserve Bank of Australia will reduce its main interest rate and Europe’s leaders may fail to quell market jitters amid work on a second aid package for Greece. New Zealand’s dollar rose after a report showed U.S. service industries expanded last month, damping economic concern.
“We’re following equity markets,” said Vassili Serebriakov, a currency strategist at Wells Fargo & Co. in New York. “Global equity markets are reasonably firm. The ISM numbers are consistent with slow growth and not a recession in the U.S. and I think that’s the view the market has been shifting to a little bit.”
Australia’s currency rose 0.8 percent to 96.51 U.S. cents as of 2:28 p.m. in New York, from 95.72 cents yesterday and after earlier dropping to as low as 94.88 cents. It gained 0.8 percent to 74.12 yen. New Zealand’s dollar traded at 76.62 U.S. cents from 76.01. It fetched 58.81 yen from 58.39 yesterday.
The Standard & Poor’s 500 Index gained 0.7 percent.
The Institute for Supply Management’s non-manufacturing index fell to 53 in September from 53.3 in August, higher than the 52.8 forecast in a Bloomberg News survey.
The Aussie and kiwi dropped earlier after Moody’s Investors Service yesterday lowered Italy’s rating three levels to A2 from Aa2, with a negative outlook.
Australia’s central bank signaled yesterday it has scope to lower the nation’s cash target from its current level of 4.75 percent if necessary as inflationary pressures ease. Investors see a 75 percent chance of a half percentage point reduction in November, according to cash rate futures.
--With assistance from Kristine Aquino in Singapore. Editors: Paul Cox, Dennis Fitzgerald
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