Bloomberg News

Aussie, N.Z. Dollars Climbs Most in One Month on Draghi Talk

July 26, 2012

The Australian and New Zealand dollars gained the most this month against the greenback after European Central Bank President Mario Draghi said policy makers will preserve the euro, fueling risk appetite.

The Australian dollar and its New Zealand peer, nicknamed the kiwi, rose as investors bet officials may intervene in bond markets to contain rising borrowing costs in Europe. Stocks and commodities rose.

“The kiwi is up considerably against the dollar today and against most of its counterparts benefitting from the general risk-on mood,” Ravi Bharadwaj, a market analyst in Washington at Western Union Business Solutions, a unit of Western Union Co., said in a telephone interview.

Australia’s dollar appreciated as much as 1.1 percent to $1.0402 yesterday in New York before closing at $1.0397, up 0.9 percent. The Aussie rose 0.9 percent to 81.32 yen.

New Zealand’s dollar, nicknamed the kiwi, strengthened as much as 1.8 percent, the biggest intraday jump since June 29, to 80.30 U.S. cents before closing at 80.19 cents, up 1.6 percent. It climbed 1.7 percent to 62.72 yen.

Stocks across the world rallied. The S&P 500 Index (SPX) rose as much as 1.9 percent, the most in almost a month. The MSCI Asia Pacific Index (MXAP) gained 0.8 percent, snapping a four-day losing streak.

Draghi spoke yesterday at the Global Investment Conference in London, saying surging sovereign-bond yields may fall within the ECB’s jurisdiction.

Spanish 10-year yields have reached a euro-era record of 7.75 percent, exceeding the 7 percent level that prompted bailouts for Greece, Portugal and Ireland. Yields on the Spanish 10-year bonds declined to 6.93 percent yesterday.

To contact the reporter on this story: Lindsey Rupp in New York at lrupp2@bloomberg.net

To contact the editor responsible for this story: Robert Burgess at bburgess@bloomberg.net


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