The Australian and New Zealand dollars climbed as U.S. reports next week may show slowing new home sales and weakening confidence, boosting speculation the Federal Reserve will add measures to support the economy.
The so-called Aussie strengthened versus most of its 16 major peers this week after Fed Chairman Ben S. Bernanke said he may consider a third round of asset purchases, or quantitative easing, after a two-day central bank meeting this week. Gains in both South Pacific currencies were tempered as Asian stocks extended a global equity rout and after Moody’s Investors Service lowered the ratings for 15 banks, including Credit Suisse Group AG and Morgan Stanley.
“There are some prospects the Fed will embark on QE3 somewhere in the later part of the year,” said Lee Wai Tuck, a currency strategist at Forecast Pte in Singapore. “There will still be interest to buy the Aussie and the kiwi on dips, but they’re still a sell on rallies.”
The Australian dollar rose 0.2 percent to $1.0055 at 3:52 p.m. in Sydney. It added 0.4 percent to 80.89 yen after falling 0.7 percent yesterday. New Zealand’s currency gained 0.3 percent to 78.87 U.S. cents. It added 0.5 percent to 63.45 yen.
The Aussie was little changed versus the U.S. dollar since June 15, after posting the biggest two-week advance since the period through Dec. 9. Its New Zealand counterpart has climbed 0.1 percent, following a three-week gain.
Australian bonds rose, pushing the 10-year yield down by eight basis points, or 0.08 percentage point, to 3.06 percent. New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, fell one basis point to 2.74 percent.
The MSCI Asia Pacific Index (MXAP) of shares slid 1.1 percent. The Standard & Poor’s 500 Index (SPX) slumped 2.2 percent yesterday, the biggest one-day decline since June 1, and the Stoxx Europe 600 Index fell 0.5 percent.
Sales of new homes in the U.S. probably rose 0.7 percent in May after a 3.3 percent gain in the previous month, according to the median estimate in a Bloomberg News survey. The Commerce Department will issue the data on June 25. Figures from the Conference Board the following day may show a consumer confidence index declined to 64 in June from 64.9 last month, a separate poll showed.
The Aussie has lost 0.7 percent in the past three months, according to Bloomberg Correlation-Weighted Indexes. Its New Zealand counterpart added 0.1 percent, according to the gauge that tracks 10 developed-nation currencies.
The banks that Moody’s downgraded have “significant exposure to the volatility and risk of outsized losses inherent to capital-markets activities,” the company’s Global Banking Managing Director Greg Bauer said yesterday in a statement.
“The environment is still quite risk averse,” said Janu Chan, an economist at St. George Bank Ltd. in Sydney. “There’s probably likelihood of more downward pressure on the Aussie.”
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