The Australian and New Zealand dollars rose as an election victory by supporters of Greece’s bailout eased concern the nation will leave the euro bloc.
Both South Pacific currencies gained after projections based on 99 percent of votes counted showed the New Democracy and Pasok parties would together be able to forge a parliamentary majority. The so-called Aussie touched a one-month high as Australia’s treasurer said mineral exploration spending in the nation rose to a record in March. New Zealand’s dollar, nicknamed the kiwi, reached the strongest in six weeks as the country’s services industries grew last month.
“The easing of fears for a Greek euro exit have spurred a relief rally across global markets,” said Mike Jones, a Wellington-based currency strategist at Bank of New Zealand Ltd. “Markets seem to have got the result they wanted from the elections over the weekend. In the short term, risk currencies such as the kiwi and Aussie are biased to strengthen.”
The Australian dollar climbed 0.6 percent to $1.0116 as of 4:09 p.m. in Sydney from the close in New York on June 15, after earlier touching $1.0135, the strongest since May 10. The Aussie added 1.1 percent to 80.17 yen.
New Zealand’s currency reached 79.38 U.S. cents, the most since May 8, before trading at 79.37, 0.7 percent stronger than last week. It gained 1.4 percent to 62.88 yen.
Australian bonds fell, pushing the 10-year yield up by nine basis points, or 0.09 percentage point, to 3.08 percent. New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, climbed seven basis points to 2.70 percent.
Yesterday’s vote forced Greeks, in a fifth year of recession, to accept austerity or reject the conditions of international aid. European governments indicated a willingness to adjust the terms of Greece’s bailout package as long as a new government “swiftly” emerges from the election, according to a statement by finance chiefs in the euro area. Leaders of the Group of 20 nations begin a summit today in Los Cabos, Mexico.
The Australian dollar has gained 0.9 percent in the past week, according to Bloomberg Correlation-Weighted Indexes. Its New Zealand counterpart has risen 1.7 percent, the best performance in the gauges that track 10 developed-nation currencies.
Mineral exploration spending in Australia, the world’s biggest exporter of iron ore, rose 12 percent to a record A$1.086 billion ($1.1 billion) in the March quarter and the investment pipeline in the resources industry reached an estimated A$500 billion on demand from Asia, Treasurer Wayne Swan said in his weekly economic note yesterday.
“The fears of economic weakness in Australia are definitely overdone,” Mitul Kotecha, head of global currency strategy in Hong Kong at Credit Agricole Corporate & Investment Bank, told Bloomberg Television today. The Australian dollar may climb toward $1.09 by year-end, he said.
In New Zealand, the Performance of Services Index climbed to 56.8, the highest since November 2007, according to a report today by the Bank of New Zealand Ltd. and Business NZ. Consumer confidence fell to 99.90 this quarter from 102.40 in the three months through March, figures from Westpac Banking Corp. and McDermott Miller Ltd. showed today.
Futures traders trimmed bets that the Australian dollar will depreciate against the greenback, according to data from the Commodity Futures Trading Commission last week.
The difference in the number of wagers on a decline in the Aussie compared with those on a gain, known as net shorts, was 45,459 in the five days ended June 12, down from a record 51,172 in the previous period.
“I think we’re lacking a fresh reason to buy here, aside from maybe short-covering,” Sean Callow, a senior currency strategist at Westpac Banking Corp. (WBC) in Sydney, said about the Aussie today in an interview with Bloomberg Television. Short covering is when investors end bets an asset will decline. “We’re probably pretty close to what might be multi-week highs,” he said.
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