Bloomberg News

Aussie Erases Gains Versus Yen on BOJ Stimulus Pause

April 10, 2012

The Australian and New Zealand dollars erased advances versus the yen after the Bank of Japan (8301) declined to boost stimulus measures and a Chinese official said the global environment remains “grim.”

Australia’s bonds surged as Asian stocks fell, with gains in 15-year debt meaning that all government yields are lower than the central bank’s overnight rate for the first time in two months. Demand for the so-called Aussie was supported after China posted an unexpected trade surplus and a private report showed that business confidence in Australia rebounded.

“The market was pricing in a bit more than what they actually received from the Bank of Japan,” said Alex Nicholas, a foreign-exchange dealer at Velocity Trade Ltd. in Auckland. “We saw quite a drop following the announcement,” he said, referring to the Aussie-yen rate.

Australia’s dollar slid 0.2 percent to 83.88 yen as of 4:12 p.m. in Sydney, after earlier advancing as much as 0.7 percent. It was unchanged from yesterday at $1.0313, holding onto a three-day increase. New Zealand’s currency declined 0.3 percent to 66.77 yen. The so-called kiwi lost 0.1 percent to 82.09 U.S. cents.

Australia’s government bonds advanced, pushing the yield on the 10-year security down as much as 16 basis points, or 0.16 percentage point, to 3.87 percent, the lowest since Feb. 7 and below the Reserve Bank of Australia’s cash rate of 4.25 percent. The 15-year yield slid 15 basis points to 4.19 percent.

The BOJ kept its key rate at between zero and 0.1 percent, according to its statement released in Tokyo today. The central bank refrained from expanding monetary easing to counter deflation, resisting pressure from lawmakers for more stimulus.

The MSCI Asia Pacific Index (MXAP) of stocks slid 0.3 percent, following a 1.1 percent drop in the Standard & Poor’s 500 Index yesterday.

China Trade

China’s trade surplus was $5.35 billion, the customs bureau said in a statement on its website today. Exports rose 8.9 percent from a year earlier, while inbound shipments increased 5.3 percent. The median estimate in a Bloomberg News survey of economists was for a $3.15 billion trade deficit.

“While there is sustained mediocre-to-good news coming out of China on the growth front, the Aussie is likely to slowly grind higher,” said Velocity’s Nicholas.

The March trade data shows the global environment remains “grim,” Zheng Yuesheng, head of the customs bureau’s statistics department, said on Chinese state television today.

Australian business confidence rebounded to a reading of 3 last month from a five-month low of 1 in February, a National Australia Bank Ltd. (NAB) survey of about 400 companies taken March 26-30 and released in Sydney today showed.

To contact the reporters on this story: Mariko Ishikawa in Tokyo at mishikawa9@bloomberg.net;

To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net


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