Bloomberg News

Aussie, Kiwi Gain Versus Dollar on China Manufacturing Optimism

October 24, 2011

Oct. 24 (Bloomberg) -- The Australian and New Zealand dollars rose for a third day after a report showed China’s manufacturing may expand for the first time in four months.

The Aussie and kiwi extended their gains versus the greenback as U.S. stocks rallied along with commodities, encouraging demand for higher-yielding assets.

“Anything that comes through that’s positive on China is probably going to help the Aussie,” said Roland Randall, an economist at TD Securities Inc. in Singapore.

Australia’s dollar gained 0.7 percent to $1.0452 at 1:01 p.m. New York time, after earlier losing as much as 0.6 percent. New Zealand’s dollar advanced 0.6 percent to 80.78 U.S. cents. It was a holiday in New Zealand.

The preliminary reading of 51.1 for the Chinese manufacturing index released by HSBC Holdings Plc and Markit Economics today was the highest in five months and compares with the final reading of 49.9 for September and August. A reading above 50 indicates expansion. China is Australia’s largest trading partner.

The Standard & Poor’s 500 Index rose 1.1 percent in a third straight day of gains. The S&P GSCI Index of 24 raw materials rallied 1.8 percent.

The Australian dollar declined earlier today on speculation slowing inflation may prompt the Reserve Bank of Australia to consider lowering borrowing costs.

‘Downside Miss’

“Any downside miss is likely to raise expectations of a near-term rate cut,” Emma Lawson, a currency strategist at National Australia Bank Ltd. in Sydney, wrote in a report today.

Third-quarter producer prices in Australia rose 0.6 percent in the third quarter, the Bureau of Statistics said. That’s the slowest pace this year and compares with a 0.8 percent gain estimated by economists in a Bloomberg News survey.

The consumer price index increased 0.6 percent in the three months through September from the prior period, according to the median forecast of economists in a separate survey before figures are released Oct. 26. Prices climbed 0.9 percent in the second quarter.

The Aussie has depreciated 1.3 percent this year in the third-worst performance among developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes.

--With assistance from Allison Bennett in New York. Editors: Dennis Fitzgerald, Dave Liedtka

To contact the reporters on this story: Kristine Aquino in Singapore at kaquino1@bloomberg.net; Candice Zachariahs in Sydney at czachariahs2@bloomberg.net

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


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