Bloomberg News

Aussie Gains on Hopes for Stimulus as Global Central Banks Meet

July 30, 2012

The Australian dollar reached a lifetime high against the euro and gained against the greenback as central banks in Europe and the U.S. prepare to meet amid speculation policy makers will seek to boost the global economy.

The Australian dollar strengthened against most of its 16 major counterparts before the European Central Bank announces its next policy decision Aug. 2 The Federal Reserve starts a two-day policy meeting today at which it may announce additional measures to boost economic growth. The New Zealand dollar, nicknamed the kiwi, declined against the greenback as North American stocks fell.

“I think the market’s really looking to get some more good news from either the ECB or the Fed,” Steve Butler, director of foreign-exchange trading in Toronto at Bank of Nova Scotia’s Scotia Capital unit, said in a telephone interview. “I’m a little concerned on that note that the hopes are set a lot higher than they would have been if we hadn’t heard from the ECB last week.”

Australia’s dollar appreciated 0.2 percent to $1.0503 yesterday in New York. The Aussie fell 0.2 percent to 82.11 yen and reached A$1.1652 per euro, the strongest since the 17-nation currency started trading in 1999.

New Zealand’s dollar fell 0.1 percent to 80.89 U.S. It lost 0.5 percent to 63.24 yen.

European Central Bank President Mario Draghi met U.S. Treasury Secretary Timothy Geithner yesterday as he attempted to win over Bundesbank President Jens Weidmann on measures to ease the region’s debt woes. The proposal involves the European Financial Stability Facility buying government bonds in the primary market, buttressed by ECB purchases on the secondary market to ensure transmission of its record-low interest rates, two central bank officials said July 27 on condition of anonymity.

While U.S. central bank policy makers refrained from introducing a third round of asset purchases at their session last month, Fed Chairman Ben S. Bernanke indicated that it’s a possibility. The Fed purchased $2.3 trillion of securities from 2008 to 2011 in two rounds of a stimulus strategy called quantitative easing.

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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