The Australian dollar climbed to its highest level since it began trading freely in 1983 as a gain in global stocks encouraged demand for higher-yielding assets.
The Aussie and New Zealand’s kiwi dollar rose against the yen as reports showing a rebound in Australian consumer confidence and an unexpected increase in Japanese machinery orders buoyed optimism in the Asia-Pacific economy.
“Solid performance on the stock market spurs risk sentiment,” said Toshiya Yamauchi, a senior currency analyst at Ueda Harlow Ltd. in Tokyo.
Australia’s currency climbed 0.6 percent to 99.25 U.S. cents at 11:08 a.m. in New York, from 98.63 cents yesterday, after touching a record 99.29 U.S. cents. The currency gained 0.7 percent to 81.14 yen, from 80.59. New Zealand’s dollar appreciated 1 percent to 76.27 U.S. cents, from 75.52. It advanced 1.1 percent to 62.36 yen, from 61.71 yen.
The sentiment index for Australia rose 3.3 percent to 117 this month, after a 5 percent drop in September, according to a Westpac Banking Corp. and Melbourne Institute survey of 1,200 consumers conducted Oct. 4-10 and released today in Sydney.
Japan’s machine orders rose 10.1 percent in August from July, when they increased 8.8 percent, the Cabinet Office said today in Tokyo. The median forecast of 28 economists surveyed by Bloomberg News was for a 3.9 percent decrease.
The Standard & Poor’s 500 Index climbed 0.8 percent, touching a five-month high as Intel Corp. and JPMorgan Chase & Co. reported better-than-estimated results. Crude oil for November delivery rose 1.8 percent to $83.10 a barrel.
Fed Speculation
The Aussie also advanced versus the greenback on mounting expectations for additional purchases of debt by the Federal Reserve, known as quantitative easing.
Policy makers “wanted to consider further the most effective framework for calibrating and communicating any additional steps to provide such stimulus,” the Fed said in minutes of its Sept. 21 meeting, released yesterday in Washington. The central bank also said for the first time that it was considering targeting a path for the level of nominal gross domestic product as a way to increase price expectations.
“The Fed was poised to restart quantitative easing,” wrote John Kyriakopoulos, head of currency strategy at National Australia Bank Ltd. in Sydney, in a note to clients. “The top end of our short-term model’s fair-value range for the AUD/USD has risen to 1.0 for the first time since May 2008.”
Benchmark interest rates are 4.5 percent in Australia and 3 percent in New Zealand, compared with as low as zero in Japan and the U.S., attracting investors to the South Pacific nations’ higher-yielding assets. The risk in such trades is that currency market moves will erase profits.
Australian bonds fell, with the yield on the benchmark 10- year note rising 0.02 percentage point to 5 percent, according to data compiled by Bloomberg. New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, rose 0.005 percentage point to 3.75 percen
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The Aussie and New Zealand’s kiwi dollar rose against the yen as reports showing a rebound in Australian consumer confidence and an unexpected increase in Japanese machinery orders buoyed optimism in the Asia-Pacific economy.
“Solid performance on the stock market spurs risk sentiment,” said Toshiya Yamauchi, a senior currency analyst at Ueda Harlow Ltd. in Tokyo.
Australia’s currency climbed 0.6 percent to 99.25 U.S. cents at 11:08 a.m. in New York, from 98.63 cents yesterday, after touching a record 99.29 U.S. cents. The currency gained 0.7 percent to 81.14 yen, from 80.59. New Zealand’s dollar appreciated 1 percent to 76.27 U.S. cents, from 75.52. It advanced 1.1 percent to 62.36 yen, from 61.71 yen.
The sentiment index for Australia rose 3.3 percent to 117 this month, after a 5 percent drop in September, according to a Westpac Banking Corp. and Melbourne Institute survey of 1,200 consumers conducted Oct. 4-10 and released today in Sydney.
Japan’s machine orders rose 10.1 percent in August from July, when they increased 8.8 percent, the Cabinet Office said today in Tokyo. The median forecast of 28 economists surveyed by Bloomberg News was for a 3.9 percent decrease.
The Standard & Poor’s 500 Index climbed 0.8 percent, touching a five-month high as Intel Corp. and JPMorgan Chase & Co. reported better-than-estimated results. Crude oil for November delivery rose 1.8 percent to $83.10 a barrel.
Fed Speculation
The Aussie also advanced versus the greenback on mounting expectations for additional purchases of debt by the Federal Reserve, known as quantitative easing.
Policy makers “wanted to consider further the most effective framework for calibrating and communicating any additional steps to provide such stimulus,” the Fed said in minutes of its Sept. 21 meeting, released yesterday in Washington. The central bank also said for the first time that it was considering targeting a path for the level of nominal gross domestic product as a way to increase price expectations.
“The Fed was poised to restart quantitative easing,” wrote John Kyriakopoulos, head of currency strategy at National Australia Bank Ltd. in Sydney, in a note to clients. “The top end of our short-term model’s fair-value range for the AUD/USD has risen to 1.0 for the first time since May 2008.”
Benchmark interest rates are 4.5 percent in Australia and 3 percent in New Zealand, compared with as low as zero in Japan and the U.S., attracting investors to the South Pacific nations’ higher-yielding assets. The risk in such trades is that currency market moves will erase profits.
Australian bonds fell, with the yield on the benchmark 10- year note rising 0.02 percentage point to 5 percent, according to data compiled by Bloomberg. New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, rose 0.005 percentage point to 3.75 percen
http://jodnet.blogspot.com
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