Bloomberg News

Aussie Rallies After Global Growth Upgrade; N.Z. Dollar Gains

April 17, 2012

Australia’s dollar rose against most major counterparts as the International Monetary Fund raised its global economic growth outlook, spurring demand for higher-yielding assets.

New Zealand’s dollar gained versus the greenback and yen as implied volatility of Group of Seven currencies reached the lowest level in more than three years. Both South Pacific nations’ currencies were buoyed as global commodities and stocks rallied after investor confidence rose in Germany and increased demand at a Spanish bill auction eased concern Europe’s debt crisis is worsening.

The Australian currency rose 0.3 percent to $1.0390 yesterday in New York. It gained 0.9 percent versus to 84 yen.

New Zealand’s currency was 0.1 percent stronger at 82.10 U.S. cents and rallied 0.6 percent to 66.38 yen.

The MSCI World Index of stocks climbed 1.6 percent, and the Standard & Poor’s GSCI Index of 24 raw materials rose 0.5 percent.

The implied volatility of three-month options for Group of Seven currencies declined 1.3 percent to 9.66 percent, the lowest level since August 2008, according to the JPMorgan G7 Volatility Index. The average over the past decade is 10.6 percent. A decrease makes investments in currencies with higher benchmark rates more attractive because it shows the risk is greater that market moves will erase profits on such trades.

IMF Outlook

The International Monetary Fund’s World Economic Outlook forecast the global economy will expand 3.5 percent this year and 4.1 percent in 2013, an increase from its January projections of 3.3 percent growth in 2012 and 4 percent next year.

The ZEW Center for European Economic Research in Mannheim said its index of investor and analyst expectations increased to 23.4 in April, the highest since June 2010, from 22.3 in March.

Demand for Spanish 12-month bills offered yesterday was 2.9 times the amount sold, compared with 2.14 times last month, Bank of Spain data showed. The bid-to-cover ratio for 18-month notes was 3.77, compared with 2.93 on March 20.

To contact the reporter on this story: Allison Bennett in New York at abennett23@bloomberg.net

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


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