Aussie raise interest rates Outlook Above $1.10 for First Time

Aussie raise interest rates Outlook Above $1.10 for First Time : The Australian dollar reached a record, climbing above $1.10 for the first time since it was freely floated, on speculation increasing commodity prices will keep pressure on the central bank to raise interest rates.

Australia’s currency advanced before a report forecast to show U.S. manufacturing expanded at a slower pace in April, adding to signs the South Pacific nation’s central bank will raise borrowing costs before its U.S. counterpart does. The New Zealand dollar touched the highest level since March 2008 against its U.S. counterpart as stock gains boosted demand for higher-yielding assets.

The Aussie dollar “is befitting in three ways, and three ways are commodity prices, the second one is the U.S. dollar weakness and the third one is the anticipation of interest-rate hikes,” said Kurt Magnus, executive director of currency sales in Sydney at Nomura Holdings Inc., Japan’s biggest brokerage.

The Australian dollar was at $1.0996 at 10:38 a.m. in Sydney from $1.0971 in New York on April 29. It earlier touched $1.1004, the highest level since the Aussie began trading freely in 1983. It gained 6.2 percent in April, for its third straight monthly advance.

New Zealand’s currency traded at 80.93 U.S. cents from 80.99. It reached 81.09 U.S. cents, the highest since March 2008.

The Institute for Supply Management’s manufacturing index fell to 59.5 last month from 61.2 in March, according to the median economist estimate in a Bloomberg News survey before the Tempe, Arizona-based group reports the data today. Figures greater than 50 signal expansion.

Higher Commodities, Stocks

The Thomson Reuters/Jefferies CRB Index of 19 raw materials rose 1.2 percent on April 29. The MSCI Asia Pacific Index of regional shares gained 0.7 percent today.

The New Zealand dollar dropped earlier today against the greenback after the 14-day relative strength index for the pair rose above 70 last week, a threshold that some traders see as a sign an asset is poised to reverse course.

“The recent strong performance is technically in need of a correction, but with plenty of buyers waiting in the wings it may again confound currency market participants,” Senior Economist Sharon Zollner and Senior Currency Dealer Alex Sinton at ANZ National Bank Ltd. wrote in a research note today. For the latest updates PRESS CTR + D or visit Stock Market news Today

Related Post: