Bloomberg News

Aussie, Kiwi Advance as G-7 Officials Offer Conflicting Views

February 12, 2013

The Australian dollar rose from almost a four-month low against its U.S. counterpart as unnamed Group of Seven officials gave differing signals over whether member nations are concerned with excess moves in the yen.

The Aussie appreciated versus all of its most-traded peers except the yen and New Zealand dollar after reaching a key technical support level and two business-confidence surveys rose. New Zealand’s currency climbed to a four-day high versus the greenback as reports showed new-house prices and spending on electronic credit cards rose.

“The Aussie seemed to follow along with the broader move in the market, and that brings us to the core themes of the G-7 comments,” Camilla Sutton, chief currency strategist for Bank of Nova Scotia, said in a telephone interview from Toronto. “Most of its moves were seen were seen during the North American session.”

The Aussie strengthened 0.5 percent to $1.0305 yesterday in New York trading after falling to $1.0227, the lowest since Oct. 15. It declined 0.4 percent to 96.32 yen.

The New Zealand dollar, nicknamed the kiwi, gained 0.6 percent to 84.03 U.S. cents and dropped 0.3 percent to 75.55 yen.

Standard & Poor’s GSCI Index of 24 raw materials increased 0.1 percent.

Dueling Comments

The dollars of the South Pacific nations fell against the yen as an official in Washington, who requested not to be further identified, said G-7 nations are concerned about excessive moves in Japan’s currency and that it will be discussed at the Group of 20 meeting this weekend. A U.K. official who requested anonymity said later that the G-7 was not singling out an individual country or currency.

Both comments followed a G-7 statement that appeared to signal acceptance for a weaker Japanese currency, so long as Prime Minister Shinzo Abe’s government didn’t actively pursue devaluation.

Australian business confidence index for January rose to 3 from a revised 2 in the month prior, according to a National Australia Bank Ltd. survey released yesterday of more than 400 companies taken Jan. 25-Feb. 4. The business conditions gauge, a measure of hiring, sales and profits, improved to a minus 2 from a revised minus 5.

The Aussie halted its recent drop versus the greenback after finding support toward $1.0225, JPMorgan Chase & Co. said, citing trading patterns.

Fibonacci Analysis

The area from $1.0255 to $1.0225 contains the 38.2 percent Fibonacci retracement of the currency’s advance from last year’s low of 95.82 cents to $1.0625 on Sept. 14. It also includes the 76.4 percent retracement from the October low of $1.0149, Niall O’Connor, a technical analyst at JP Morgan, wrote yesterday in a note to clients.

Fibonacci analysis, based on the work of 13th century mathematician Leonardo of Pisa, known as Fibonacci, is founded on the theory that prices rise or fall by certain percentages after reaching a new high or low. Support is an area on a price graph where buy orders may clustered.

The kiwi gained after a report showed purchases on debit, credit and store cards rose for a fourth month, Statistics New Zealand said yesterday.

New Zealand’s home prices rose 7.2 percent in January from a year earlier, led by demand in Auckland, its biggest city, the Real Estate Institute of New Zealand said in an e-mailed statement.

The Aussie fell 2.7 percent during the past three months among the 10 developed-nation currencies monitored by the Bloomberg Correlation-Weighted Indexes. The kiwi gained 1.7 percent. The greenback dropped 1.4 percent and the yen led decliners, plunging 18 percent.

To contact the reporter on this story: Taylor Tepper in New York at ttepper2@bloomberg.net

To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net


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