Bloomberg News

Aussie Dollar Rises, Snaps 3-Day Drop, Before Wages Data

November 12, 2012

Australia’s dollar advanced, snapping a three-day loss, amid speculation a wage report this week will back the view that interest rates won’t decline.

The New Zealand dollar and the so-called Aussie gained against most of their major peers after a bigger-than-estimated trade surplus in China brightened prospects for commodity exports, and data today showed Australian home-loan approvals rose for a second month. Government bonds in Australia climbed, sending 10-year yields to the lowest in almost four weeks. The Reserve Bank of Australia kept rates at 3.25 percent on Nov. 6.

“The recent inaction by the RBA, and the statement that accompanied that, all signaled that the RBA has an easing bias, but seems to be more data-dependent than it had been previously,” said Gavin Stacey, a Sydney-based strategist at Barclays Plc. “If the wages come out on the stronger side, maybe the rate cut scenario dies and that would then be supportive of the Aussie dollar.”

The Aussie dollar rose 0.2 percent from last week to $1.0412 as of 6:06 p.m. in Sydney and strengthened 0.2 percent to 82.75 yen. It touched $1.0480 on Nov. 7, the highest since Sept. 21. New Zealand’s currency gained 0.3 percent to 81.62 U.S. cents and added 0.2 percent to 64.87 yen.

Australian bonds advanced, pushing the yield on benchmark 10-year debt down three basis points to 3.07 percent. It earlier touched 3.06 percent, the lowest since Oct. 16.

The MSCI Asia Pacific index of stocks lost 0.4 percent.

Housing Data

Australia’s home-loan approvals rose 0.9 percent in September from the previous month, when it grew by a revised 2.1 percent, the statistics bureaus said in Sydney today. The nation’s wage price index probably increased 0.8 percent in the third quarter from the prior three-month period, according to the median estimate of economists surveyed by Bloomberg News before the data on Nov. 14.

“Rates are probably now on hold until February, a cut needing a moderate Q4 inflation, some clearer reversion to domestic economic weakness and continuing anemic global growth,” David de Garis, a senior economist at National Australia Bank Ltd. in Melbourne, wrote in research today.

Interest-rate swaps data compiled by Bloomberg show traders see a 60 percent chance the central bank will lower its benchmark to 3 percent next month. That compares with a 68 percent chance indicated on Nov. 7.

Aussie Longs

Futures traders increased their bets that the Australian dollar will rise against the U.S. dollar, figures from the Washington-based Commodity Futures Trading Commission show.

The difference in the number of wagers by hedge funds and other large speculators on a gain in Australia’s dollar compared with those on a drop -- so-called net longs -- was 60,317 on Nov. 6. Net longs were 52,090 a week earlier.

In China, the customs administration said Nov. 10 the nation’s exports exceeded imports by $32 billion in October, compared with a $27.3 billion trade surplus estimated by economists surveyed by Bloomberg. China is Australia’s biggest trading partner and New Zealand’s second-largest export market.

Some indicators are rebounding and the economy is stabilizing, Zhou Xiaochuan, head of the People’s Bank of China, said Nov. 8 in Beijing at a briefing during the Communist Party’s 18th Congress.

“The Chinese story improving would tend to be somewhat supportive of Australian dollar strength going forward,” said Barclays’s Stacey.

To contact the reporter on this story: Mariko Ishikawa in Tokyo at mishikawa9@bloomberg.net

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


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