“The Australian dollar rose to the highest in almost two weeks against its U.S. counterpart before the Federal Reserve opens a two-day meeting amid speculation it will maintain bond purchases for the foreseeable future.
The so-called Aussie rose against most of its major peers as Asian stocks gained and data showed private sector credit increased in March. Demand for New Zealand’s dollar was limited after the nation’s building approvals unexpectedly declined, easing pressure on the Reserve Bank to tighten monetary policy.
“There could be more reserve diversification flowing into currencies like the Australian dollar,” said Jonathan Cavenagh, a strategist at Westpac Banking Corp. (WBC) in Singapore. “The general consensus is that the Fed is going to remain fairly dovish. The question is not whether or not quantitative easing is going to be maintained, but if it’s going to be stepped up, and that’s played a part in the U.S. dollar’s recent selloff.”
The Australian dollar touched $1.0372, the highest level since April 17, before trading 0.1 percent higher than yesterday at $1.0358 as of 5:08 p.m. in Sydney, trimming its monthly slide to 0.6 percent. The currency rose 0.2 percent to NZ$1.2105. New Zealand’s dollar slid 0.1 percent to 85.57 U.S. cents.
Australian government bonds rose, with the yield on 10-year debt falling one basis point, or 0.01 percentage point, to 3.09 percent, after touching 3.077 percent, matching the lowest since Nov. 19. The three-year rate dropped as low as 2.57 percent, a level unseen since Dec. 3.
The MSCI Asia Pacific Index of stocks climbed 0.8 percent, following a 0.7 percent gain in the MSCI World Index yesterday.
