Aug. 19 (Bloomberg) -- The Australian dollar advanced for a second day after Exxon Mobil Corp. agreed to supply PetroChina Co. with liquefied natural gas from Australia. New Zealand’s currency was little changed. Demand for Australia’s currency increased after Minister for Resources and Energy Martin Ferguson said the A$50 billion ($41 billion) accord was the country’s biggest ever. Both currencies pared earlier gains after the Shanghai Composite Index, tracking the bigger of China’s exchanges, fell as much as 0.8 percent. “We had some really good news on the commodities front with the announcement of the A$50 billion trade deal with China,” said Timothy Connors, head of foreign exchange at Custom House Global Foreign Exchange in Sydney. “Broadly speaking, that’s very Australian-dollar supportive and that enthusiasm will drive a rebound in the Aussie today across the board,” he said, using the currency’s nickname. Australia’s dollar rose 0.2 percent to 82.85 U.S. cents as of 2:36 p.m. in Sydney from 82.68 cents in New York yesterday. The currency advanced to 78.46 yen from 78.28 yen. New Zealand’s dollar gained to 67.56 U.S. cents from 67.48 cents in New York yesterday and traded at 63.97 yen from 63.89. Shanghai Stocks The Australian and New Zealand currencies ended two days of losses yesterday after the Shanghai Composite Index climbed, rebounding from its biggest drop in nine months, and global equities rallied. Benchmark interest rates are 3 percent in Australia and 2.5 percent in New Zealand, attracting investors to the two nations’ assets. The risk in such trades is that exchange-rate changes will erase profits. “Currency markets will be watching the Shanghai share market which has been a pretty big influence on the Aussie recently,” said Joseph Capurso, a currency strategist at Commonwealth Bank of Australia in Sydney. “It wouldn’t surprise me if the Shanghai Composite continues to fall and we see further weakness in the Aussie.” The Australian dollar will find buyers on a decline toward 81.50 cents, he said. Societe Generale SA’s Hong Kong-based currency strategist Patrick Bennett recommended selling the Aussie against Japan’s currency on rallies toward 80 yen due to the potential for a “risk unwind,” in a note sent to clients. Australian government bonds rose. The yield on 10-year notes fell five basis points, or 0.05 percentage point, to 5.48 percent, according to data compiled by Bloomberg. The price of the 5.25 percent security due March 2019 added 0.387, or A$3.87 per A$1,000 face amount, to 98.284. New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, fell to 4.06 percent from 4.08 yesterday.

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