BLBG: Australian Dollar Advances as Stocks Gain; N.Z. Dollar Slides
By Candice Zachariahs
Dec. 8 (Bloomberg) -- The Australian dollar rose as stocks gained amid reports U.S. lawmakers may agree to rescue automakers, spurring investors to buy high-yielding assets. New Zealand’s dollar fell after the prime minister said it may decline.
The Australian dollar extended gains from Dec. 5 after U.S. President-elect Barack Obama on the weekend pledged the biggest public works program in about 50 years to help fuel growth in the world’s biggest economy. New Zealand Prime Minister John Key yesterday said exporters would benefit as the kiwi, as the currency is called, may drop below 50 U.S. cents.
“The equity market’s rebound is encouraging the Aussie up,” said Joe Capurso, a currency strategist in Sydney at Commonwealth Bank of Australia Ltd., the nation’s biggest mortgage lender. “The reality is that the world economy is in very poor shape and that’s typically bad news for the Aussie,” he said, referring to the currency by its nickname.
Australia’s currency gained 0.8 percent to 65.19 U.S. cents as of 3:11 p.m. in Sydney, from 64.67 cents in New York late last week. The currency rose 0.9 percent to 60.55 yen. The Australian dollar will trade between 63 and 65 U.S. cents this week, Capurso said.
New Zealand’s dollar slid 0.1 percent to 53.26 U.S. cents from 53.32 cents in New York. It fell 0.1 percent to 49.46 yen.
The Australian dollar advanced as U.S. lawmakers approached agreement on bridge loans for General Motors Corp. and Chrysler LLC to help the automakers survive this month. President-elect Obama said at a press conference in Chicago on Dec. 6 that he will boost investment in roads, bridges and public buildings to create and preserve 2.5 million jobs.
New Zealand’s Prime Minister Key said yesterday that the kiwi “will print with a four in front of it at some point against the U.S. dollar, and probably a seven when it comes to the Australian cross rate,” on Television in New Zealand’s Agenda Program. The currency fell 0.7 percent to 81.87 Australian cents and touched 81.52, the lowest since Sept. 26.
“The market’s priced in that, over a several-month horizon, the kiwi is going to be weaker,” said Imre Speizer, a market strategist in Wellington with Westpac Banking Corp. “It’s slightly unusual the Prime Minister said it, but apart from that it’s nothing new.”
Westpac forecasts that New Zealand’s dollar will bottom at close to 45 U.S. cents in the first quarter and then climb to about 56 cents by the end of 2009. It will fall to a low of 80 Australian cents by the middle of next year, the bank said.
Gains in the Australian dollar may be limited this week before a report that economists say will show the number of people employed fell 15,000, according to a Bloomberg News survey. The unemployment rate is forecast to rise to 4.4 percent, the highest since November 2007, from 4.3 percent. The statistics bureau will release the report on Dec. 11.
Job Ads Drop
Australian job-vacancy advertisements fell for a seventh month in November, led by a record drop in newspaper notices, according to an Australia & New Zealand Banking Group Ltd. report released today in Melbourne. Newspaper ads fell over the last two months by the most in the 30-year history of the survey, the bank said.
Futures traders increased their bets that the Australian dollar will decline against the greenback, 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 decline in the Australian currency compared with those on a gain -- so-called net shorts -- was 9,878 on Dec. 2, compared with net shorts of 8,624 a week earlier.
Australian government bonds declined. The yield on the 10- year note rose 3 basis points, or 0.03 percentage point, to 4.31 percent, according to data compiled by Bloomberg. The price of the 5.25 percent security due March 2019 fell 0.28, or A$2.8 per A$1,000 face amount, at 107.687.
New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, fell to 4.75 percent from 4.78 on Dec. 5.
To contact the reporter on this story: Candice Zachariahs in Sydney at firstname.lastname@example.org.