By - Jan 19, 2011 1:37 PM GMT+0800
The Australian dollar rose to a two- week high against the greenback before a report tomorrow forecast to show economic growth stayed above 9 percent in China, the South Pacific nation’s largest trading partner.
The so-called Aussie strengthened for a third day on speculation the Chinese data will show efforts to limit 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 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 climbed to $1.0037 as of 4:36 p.m. in Sydney from 99.94 U.S. cents in New York yesterday, after rising to $1.0039, the strongest since Jan. 5. The currency traded at 82.53 yen from 82.51 yen.
New Zealand’s dollar advanced 0.4 percent to 77.46 cents after reaching 77.58 cents, the highest since Jan. 3. The so- called kiwi bought 63.69 yen from 63.73 yen.
China’s 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 before tomorrow’s reports.
Chinese Stocks
The Shanghai Composite Index gained 1.1 percent. The gauge has fallen 2.4 percent this year amid concern China will tighten monetary policy further to keep inflation 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 at 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 the survey released today.
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 auction.
The currency was also bought before a report tomorrow that economists said will show inflation accelerated. Consumer prices in rose 2.4 percent in the fourth quarter from the previous three months, when they gained 1.1 percent, according to a Bloomberg survey.
New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, fell one basis point to 3.89 percent.
Australian bond futures fell. The 10-year contract for March delivery rose 0.10 to 94.35 on theSydney Futures Exchange. The implied yield rose 10 basis points to 5.65 percent.
To contact the reporter on this story: Candice Zachariahs in Sydney atczachariahs2@bloomberg.net.
To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net.
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