The Australian and New Zealand dollars rose against the yen as Asian stocks extended a global rally, boosting the allure of higher-yielding assets.
Both currencies snapped a two-day decline against the greenback after a private report showed improvement in China’s manufacturing industry last month, easing concern the world’s second-biggest economy will slow further. Demand for the South Pacific nations’ currencies was also bolstered before U.S. data this week forecast to show a pickup in hiring.
“I’d recommend buying the Aussie on dips,” said Hideki Shibata, a senior strategist for rates and foreign exchange at Tokai Tokyo Research Center Co. “China is more likely to avoid a hard landing” and “the U.S. is basically in a recovery trend,” he said.
Australia’s dollar, known as the Aussie, climbed 0.4 percent to 83.09 yen as of 3:55 p.m. in Sydney from the close in New York yesterday, snapping a four-day drop. It added 0.1 percent to $1.0342. New Zealand’s currency advanced 0.3 percent to 65.45 yen and lost 0.1 percent to 81.46 U.S. cents.
The MSCI Asia Pacific Index (MXAP) of shares advanced 0.6 percent. The Dow Jones Industrial Average (INDU) climbed 0.5 percent in New York yesterday to the highest close since December 2007.
The 49.3 final reading of a Chinese purchasing managers’ index released today from HSBC Holdings Plc and Markit Economics today compares with a preliminary 49.1 reported April 23 and a final 48.3 in March.
A separate index released yesterday by China’s statistics bureau and logistics federation was at 53.3, indicating the fastest growth in a year. China is Australia’s biggest trading partner and New Zealand’s second-largest export market.
Payrolls in the U.S. probably increased by 161,000 workers in April after a 120,000 gain the previous month, according to the median estimate of economists surveyed by Bloomberg News before the Labor Department data due May 4. Figures from ADP Employer Services today may show that U.S. employment grew by 170,000 in April, compared with a 209,000 increase in March.
Demand for higher-yielding currencies was limited before Spain auctions debt tomorrow maturing in 2015 and 2017. Yields on the nation’s 10-year bonds climbed above 6 percent last month, stoking speculation the euro area’s fourth-largest economy would follow Greece, Ireland and Portugal in seeking a bailout. Spain’s economy entered its second recession since 2009, government data showed this week.
“Concern about Europe’s debt crisis is simmering as Spain’s fiscal situation has yet to be resolved,” said Takuya Kawabata, a researcher at Gaitame.com Research Institute Ltd. in Tokyo, a unit of Japan’s largest currency-margin company. “People are reluctant to take risk aggressively,” weighing on the Australian and New Zealand currencies, he said.
Prices for New Zealand’s commodity exports fell 4.5 percent in April from the prior month, the biggest decline since February 2009, an index compiled by ANZ National Bank Ltd. showed today.
The Reserve Bank of Australia yesterday lowered its key rate to 3.75 percent from 4.25 percent. Only two of the 29 economists surveyed by Bloomberg predicted the half-point reduction, with the other 27 forecasting a quarter-point cut.
Australia’s two-year government notes yielded 2.55 percentage points more than similar-maturity U.S. Treasuries yesterday, the least since June 2009. Traders see a 33 percent chance that the central bank will cut the rate to 3 percent by October, according to data compiled by Bloomberg based on overnight-index swap rates.
“Markets continue to lean towards further easing, quite rightly in our view,” Sean Callow, a senior currency strategist in Sydney at Westpac Banking Corp. (WBC), wrote in a research note today. The Australian dollar “has generally been resilient in the face of a lower yield pickup but it is obviously an underlying negative for the currency.”
The currency may test $1 by June, he wrote.
Yields on Australia’s 10-year notes rose 10 basis points to 3.64 percent. New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, increased 3 1/2 basis points to 2.71 percent.
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