Last Updated on Tuesday, 30 November 1999 05:00 Tuesday, 02 August 2011 09:50
Australia s currency gained for a second day versus the yen on speculation the Reserve Bank will signal plans to increase borrowing costs at today s meeting.
The so-called Aussie erased its earlier advance against the U. S. dollar after a government report showed building approvals unexpectedly fell in June. New Zealand s dollar headed for its first back-to-back declines versus the greenback in three weeks as Asian stocks extended a global drop.
If the RBA genuinely believes 2012 s going to be better and momentum s going to pick up, rates are probably too low, said Grant Turley, a senior currency strategist in Sydney at Australia & New Zealand Banking Group Ltd. , which forecasts the central bank will raise its key rate to 5 percent today. Generally, we re positive on the Australian dollar.
Australia s dollar gained to 84. 94 yen as of 1:47 p. m. in Sydney from 84. 71 yen yesterday, when it surged as much as 2. 1 percent to 86. 18 yen. The currency bought $1. 0967 from $1. 0971 in New York yesterday, after earlier climbing to $1. 1008.
New Zealand s currency fell to 87. 45 U. S. cents from 87. 65 cents yesterday, when it touched 88. 44 U. S. cents, the most since it was freely floated in 1985. It advanced to 67. 74 yen from 67. 67 yen yesterday, when it climbed to 68. 89 yen, the highest level since May 2010.
The MSCI Asia Pacific index of regional shares slumped 1. 6 percent today after the Standard & Poor s 500 index lost 0. 4 percent in New York yesterday.
Australian central bank governor Glenn Stevens will keep the benchmark rate unchanged today at 4. 75 percent for an eighth meeting, according to 21 of 25 economists in a Bloomberg News survey. The other four forecast an increase.
Gains in the Australian dollar were limited after the Bureau of Statistics said home-building approvals dropped 3. 5 percent in June from a month earlier. The median forecast was for a 3 percent gain in a Bloomberg News survey of 21 economists.
House prices fell 0. 1 percent in the three months through June, the Sydney-based bureau said. A jump in home prices was among reasons Stevens increased the benchmark rate by 175 basis points from October 2009 to November last year.
A neutral stance for the central bank would be received as disappointing and it would weigh on the Aussie dollar if that s the case, said Sue Trinh, a senior currency strategist at Royal Bank of Canada in Hong Kong. The risk is towards the downside for the Aussie.
Courtesy: Bloom Berg
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