Bloomberg News

New Zealand, Aussie Dollars Rise on Bets Fed Will Ease

April 09, 2012

New Zealand’s dollar rose to the highest level in almost a week versus its U.S. counterpart on speculation the Federal Reserve may add stimulus after a report showed U.S. employers added fewer jobs than forecast.

Australia’s dollar gained for a third day before China is forecast to report a second monthly trade deficit, spurring bets the nation will ease monetary policy. China is Australia’s largest trade partner. Higher-yielding currencies, such as New Zealand’s dollar and the Aussie, benefited from the Fed’s first two rounds of asset purchases, known as quantitative easing.

“It’s natural to see what we’re seeing in asset markets and in particular to see the dollar-bloc currencies trade a bit more favorably headed for the important Chinese data,” said Mark McCormick, a currency strategist at Brown Brothers Harriman & Co. in New York.

The kiwi, as New Zealand’s currency is nicknamed, gained 0.2 percent to 82.16 U.S. cents yesterday in New York, after dropping earlier by as much as 0.5 percent and rising to as high as 82.38 cents, the strongest level since April 3. Australia’s dollar rose 0.1 percent to $1.0313.

Both South Pacific currencies rose on April 6, when the U.S. reported nonfarm payrolls grew by 120,000 jobs in March, the smallest amount in five months. Economists in a Bloomberg News survey forecast a 205,000 gain.

The Fed has pledged to keep its target lending rate at a record low range of zero to 0.25 percent through at least late 2014. It will hold off on increasing monetary accommodation unless the U.S. economic expansion falters or prices rise at a rate slower than its target, according to minutes of the central bank’s March 13 meeting released last week.

Fed Purchases

The central bank bought $2.3 trillion of assets to support the economy in two rounds of quantitative easing from December 2008 to June. The Australian and New Zealand dollars led the rally among the greenback’s 16 most-traded counterparts tracked by Bloomberg during the period.

Chinese imports may have gained 9 percent in March, leaving a trade deficit of $3.15 billion for the month, according to Bloomberg surveys. China posted the biggest trade gap in February since at least 1989 as exports gained less than expected and imports surged. The government will publish the latest data today.

To contact the reporter on this story: Catarina Saraiva in New York at

To contact the editor responsible for this story: Paul Cox at

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