The Australian dollar rose for a third day to a two-week high on speculation a report tomorrow will show China’s economy expanded more than 9 percent, indicating steps to curb inflation aren’t derailing growth. New Zealand’s currency reached its strongest in two weeks after Auckland-based Fonterra Cooperative Group Ltd., the world’s largest dairy exporter, said whole milk powder prices rose to a seven-month high. The two South Pacific currencies were also boosted as Asian stocks advanced and commodities rose yesterday, increasing demand for higher-yielding assets.
The China “number should give the markets confidence,” said Jim Vrondas, a manager at online foreign-exchange dealer OzForex Ltd. in Sydney. “The Chinese data should be relatively positive for the Aussie in the short term.” Australia’s currency rose to $1.0033 as of 1:48 p.m. in Sydney from 99.94 cents in New York yesterday, after earlier rising to $1.0036, the strongest level since Jan. 5. The currency was at 82.43 yen from 82.51 yen.
New Zealand’s dollar climbed 0.5 percent to 77.54 U.S. cents and earlier touched 77.58 cents, the highest since Jan. 3. The currency was at 63.70 yen from 63.73 yen. Chinese reports tomorrow will show inflation cooled to 4.6 percent in December from 5.1 percent, while the economy grew 9.4 percent in the fourth quarter bringing full-year growth to 10.2 percent, according to Bloomberg surveys.
‘Signs of Weakness’
The Shanghai Composite Index has fallen 3.2 percent this year amid concern China will extend monetary policy tightening to keep price pressures under control, risking slower growth. The central bank lifted reserve requirements for the fourth time in three months on Jan. 14. China may see “significantly lower, if more sustainable” growth in the next four years as its economy shifts from “export and investment-driven growth to a more balanced pattern,” Yu Yongding, former adviser to the Chinese central bank, wrote in the Financial Times. China must be prepared to make “short-term sacrifices,” such as asset price adjustments and job cuts to guarantee long-term stability, he wrote.
“Any signs of weakness in the Chinese numbers and a commodity currency like the Australian dollar will probably feel the effects more than others,” said Tim Waterer, a foreign-exchange dealer at CMC Markets in Sydney. Data that comes in “too low will have growth-impact concerns but too high will fuel interest-rate concerns -- so it’s a case of striking a happy median.” The Australian dollar weakened earlier after an industry report showed consumer confidence fell the most in seven months in January on concern about the economic impact of flooding in the state of Queensland. Westpac Banking Corp. and the Melbourne Institute said their sentiment index decreased 5.7 percent to 104.6 this month, according to a survey released today.
N.Z. Inflation
New Zealand’s currency was bolstered after Fonterra said prices for whole-milk powder for March delivery gained 1.5 percent, rising for a fourth straight auction. The currency may also be bought before a report tomorrow that economists said will show inflation accelerated. Consumer prices in New Zealand rose 2.4 percent in the fourth quarter from the previous three months, when they gained 1.1 percent, according to a Bloomberg News survey before the report. New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, rose to 3.91 percent from 3.90 yesterday.
Australian bond futures fell, with the 10-year contract for March delivery at 94.37 on the Sydney Futures Exchange from 94.455 yesterday. The implied yield on the futures rose 8.5 basis points to 5.63 percent.
Source: Bloomber.By
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