Bloomberg News

Aussie, N.Z. Dollars Rise Amid Signs of China Improvement

November 09, 2012

The Australian and New Zealand dollars advanced after reports showed better-than-expected industrial production and retail sales in China, boosting the export outlook for the South Pacific nations.

The so-called Aussie and kiwi reversed earlier declines versus their U.S. counterpart. China’s central bank governor and statistics chief signaled October data to be published from today will show growth improving this quarter in the world’s second-largest economy. Australia’s currency weakened earlier after the Reserve Bank reduced its 2013 growth forecast.

“Chinese data has visibly improved,” said Greg Gibbs, a senior currency strategist at Royal Bank of Scotland Group Plc in Singapore. “It continues to promote a sense that China’s economy is stabilized and may be improving. It’s consistent with a firming Australian dollar.”

The Aussie rose 0.2 percent to $1.0427 as of 5:42 p.m. in Sydney after earlier falling as much as 0.3 percent. New Zealand’s currency advanced 0.3 percent today to 81.73 U.S. cents, reversing an earlier 0.3 percent slide.

The Aussie is set for a 0.9 percent gain this week. Its New Zealand peer has dropped 1 percent since Nov. 2, the biggest decline among the U.S. dollar’s major peers.

Australian bonds advanced, pushing the yield on benchmark 10-year debt down to 3.11 percent from 3.15 percent. It earlier touched 3.09 percent, the lowest since Oct. 16. New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, climbed two basis points, or 0.02 percentage point, to 2.62 percent.

Exceeded Estimates

China’s National Bureau of Statistics said industrial production rose 9.6 percent last month from a year earlier after a 9.2 percent advance in September. Economists surveyed by Bloomberg News had predicted a 9.4 percent gain. Retail sales climbed 14.5 percent in October from a year before following a 14.2 percent gain in September. That compares with analyst projections for a 14.4 percent increase in a separate poll.

Some indicators are rebounding and the economy is stabilizing, Zhou Xiaochuan, head of the People’s Bank of China, said yesterday in Beijing at a briefing during the Communist Party’s 18th Congress. Ma Jiantang, head of the nation’s statistics bureau, said separately that people will be “more confident” about the fourth-quarter expansion.

Forecast Cut

The Aussie fell earlier today after the RBA predicted year- average gross domestic product growth of 2.25 percent to 3.25 percent in 2013. That’s lower than its August estimate of 2.75 percent to 3.25 percent, according to its quarterly monetary policy statement.

“Most of this revision to the outlook is accounted for by a change in the profile for mining investment,” the central bank said, predicting a peak in resource spending at about 8 percent of GDP from a prior 9 percent.

“The risks are that we see 2013 as a year of potentially below-trend growth,” said Jonathan Cavenagh, a currency strategist at Westpac Banking Corp. (WBC) in Singapore. “This will nudge up the odds that we see a December rate cut. Some of the headlines are certainly going to take the shine off the currency as well.”

Westpac predicts policy makers will cut the 3.25 percent overnight cash-rate target by 25 basis points at their Dec. 4 meeting and lower it by an additional quarter-percentage point to 2.75 percent by March 31, Cavenagh said.

Interest-rate swaps data compiled by Bloomberg show traders see a 61 percent chance the central bank will lower its benchmark to 3 percent next month.

To contact the reporter on this story: Kristine Aquino in Singapore at kaquino1@bloomberg.net

To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net


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