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Australia’s dollar reached a nine- month high versus the yen as an improving global growth outlook spurred prospects the Reserve Bank will keep its key interest rate unchanged next week.
The so-called Aussie strengthened against 12 of its 16 major counterparts this week after U.S. reports showed manufacturing expanded in February and jobless claims matched a four-year low last week. New Zealand’s dollar erased an earlier increase against the yen as global stocks fell. Both South Pacific currencies declined versus the dollar as weaker retail sales in Europe curbed demand for higher-yielding assets.
“I do think we’ll see a holding pattern” from the RBA, said Kara Ordway, a currency strategist at City Index Asia Pacific in Sydney. “The Aussie is certainly looking good.”
Australia’s dollar was little changed at 87.65 yen at 1:01 p.m. in New York after earlier touching 88.01 yen, the highest since May 11. It lost 0.6 percent to $1.0743. New Zealand’s currency lost 0.6 percent to 67.68 yen. It slid 1.2 percent to 82.97 U.S. cents.
The Aussie is set to complete a 0.9 percent gain against the yen since Feb. 24 for a ninth consecutive weekly advance, its longest rising streak since July 2003. The so-called kiwi is poised to fall 0.3 percent in the same period.
The MSCI World Index (MXWO) of stock fell 0.5 percent and the Standard & Poor’s 500 Index slumped 0.3 percent.
RBA policy makers will probably keep the overnight cash rate target at 4.25 percent at a meeting on March 6, according to all 24 economists surveyed by Bloomberg News.
Traders expect Australia’s central bank to reduce borrowing costs by 40 basis points within a year, according a Credit Suisse AG index based on swaps. That compares with 104 basis points in cuts predicted on Feb. 1.
The Institute for Supply Management’s factory index, a measure of manufacturing in the U.S., was at 52.4 last month from 54.1 in January, the group said in a report yesterday. Readings above 50 signal growth. First-time applications for jobless benefits fell 2,000 last week to 351,000, matching the lowest level since March 2008, the Labor Department said.
The Aussie and kiwi weakened against the greenback before European reports that may show a decline in retail sales and a contraction in services.
Euro-area retail sales dropped for a third month in January, the European Union’s statistics office will say on March 5, another Bloomberg survey showed.
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