Australia’s dollar headed for its first weekly gain in six amid speculation the currency’s almost 9 percent drop in the past two months was excessive.
The Aussie touched a one-week high after U.S. stocks rebounded, fueling appetite for the South-Pacific nation’s higher-yielding assets. New Zealand’s kiwi dollar headed for its biggest weekly gain versus the greenback in more than a year. New Zealand manufacturing expanded at the fastest pace in nine years, according to a central bank report today.
“The market’s been very short, but the fact that the Aussie couldn’t close a day below the key 93.80, 94 U.S. cent level probably cleared a few things out,” said Richard Breen, a Sydney-based senior consultant at Rochford Capital, a currency and interest-rate risk management company. “I think this could clean out a few more shorts and head up towards 98 U.S. cents.” A short position is a bet that an asset’s price will fall.
Australia’s dollar fell 0.3 percent to 96.11 U.S. cents at 9:50 a.m. in Sydney from yesterday, after touching 96.66, the highest since June 3 on a closing basis. It rose 1.6 percent yesterday. The Aussie headed for a 1.2 percent gain this week.
The kiwi dollar slid 0.2 percent to 80.79 U.S. cents after reaching 81.11. It has risen 2.4 percent this week, the most since the five days ended Dec. 2, 2011.
New Zealand’s Performance of Manufacturing Index rose to 59.2 last month from a revised 55.2 the prior month, according the Bank of New Zealand Ltd. and Business NZ. A PMI reading above 50 points indicates manufacturing is generally expanding.
The Standard & Poor’s 500 Index of U.S. stocks rallied 1.5 percent, its second-biggest gain this year.
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