Nov. 29 (Bloomberg) -- The Australian and New Zealand dollars rose to the highest level in a week as a boost in American consumer confidence this month spurred demand for higher-yielding assets.
The Aussie rose above parity with the greenback as stocks extended a global rally. The currency earlier fell as Australia’s government said it will reduce spending by A$6.8 billion ($6.8 billion) to deliver a surplus, adding pressure on the Reserve Bank of Australia to lower rates.
“We’d look at a rally in the Aussie above parity as an opportunity to sell the currency, looking for some further weakness into year-end,” said Jim Vrondas, a manager at the online foreign-exchange dealer OzForex Ltd. in Sydney.
Australia’s dollar appreciated 1.3 percent to $1.0031 at 12:20 p.m. New York time, rising above parity with its U.S. counterpart for the first time since Nov. 21. New Zealand’s dollar advanced 1.1 percent to 76.31 U.S. cents and earlier reached 76.52 cents, the highest since Nov. 17.
The Aussie was the best performer against the U.S. dollar yesterday among the most-traded currencies, rising 2 percent as equities rallied worldwide. The Standard & Poor’s 500 Index increased 0.7 percent today after gaining 2.9 percent yesterday.
Demand for Australia’s currency declined earlier after the Treasury issued its midyear fiscal update.
The reduction in government spending “gives the market a little more confidence that fiscal policy won’t be in the way of the RBA responding to global factors,” said Gavin Stacey, chief interest-rate strategist at Barclays Plc in Sydney. “The Aussie may fall into the low 90s in the near term with the risk environment likely to get worse before it gets better.”
Americans were less pessimistic on the outlook for jobs and wages this month, a report showed. The Conference Board’s index increased to 56 from a revised 40.9 reading in October in the biggest monthly gain since April 2003, figures from the New York-based private research group showed today. The gauge, at a four-month high, exceeded the most optimistic forecast in a Bloomberg News survey.
--With assistance from Allison Bennett in New York. Editors: Dennis Fitzgerald, Greg Storey
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