Australian Dollar Rises, Approaching 17-Year High, on Metals
By Fergus Maguire
June 4 (Bloomberg) -- The Australian dollar rose, approaching a 17-year high, as prices for metals exported by the nation including gold and copper climbed.
The currency has risen 5.5 percent this year as a measure of six metals on the London Metal Exchange gained 13.6 percent. Mining and energy exports account for half of Australia's shipments. A report today showed Australia's job-vacancy advertisements climbed to a record in May, adding to signs of rising employment that may boost consumer spending.
``The most potent support for the Australian dollar looks to have come from resources,'' Tony Morriss, a Sydney-based currency strategist at Australia & New Zealand Banking Group Ltd., said today in a note to clients. ``All of the commodity currencies received a boost from a surge in gold and metal prices.''
The Australian dollar rose 0.4 percent to 83.22 U.S. cents at 11:37 a.m. in Sydney. The currency traded as high as 83.92 cents on April 19, the most since August 1990.
Gold, Australia's third-biggest commodity export, rose by the most in three months in New York on June 1. Gold futures for August delivery gained $10.20, or 1.5 percent, to $676.90 an ounce. Silver rose 27 cents to $13.74 an ounce. Copper futures in New York had the first weekly gain in a month climbing 0.3 percent to $3.405 a pound.
Jobs advertised in major newspapers and on the Internet rose 10.3 percent from April to an average 251,998 a week, seasonally adjusted, according to an Australia & New Zealand Banking Group Ltd. report released in Melbourne today.
Traders are stepping up purchases of options to bet Australia's dollar will rally against the yen as a strengthening economy bolsters demand for the country's assets. The currency has risen 8.1 percent against the yen this year to 101.38.
`More Upside'
Company profits rose at the fastest pace in almost two years in the first quarter as earnings climbed at banks and retailers. Gross operating profits increased 7.6 percent from the fourth quarter, the Bureau of Statistics said in Sydney today. The median estimate in a Bloomberg News survey of 20 economists was for a 2.9 percent gain.
Speculators are wagering ``there is more upside room for the Australian dollar,'' said Neil Jones, head of European hedge fund sales at Mizuho Financial Group Inc. in London. ``There are still large amounts of money from Japan looking for high yields. Increasing demand for Australian dollar call'' options ``is set to continue.''
Demand is growing for call options granting the right to buy the Australian dollar versus the yen, relative to put options giving the right to sell.
The so-called risk-reversal rate measuring this demand was minus 1.1 percent today on a one-month maturity, compared with minus 2.0 percent reached in April, the lowest since October 2003. A higher risk-reversal rate shows greater demand for calls on the Australian dollar relative to puts.
Elsewhere, New Zealand's dollar was at 74.45 U.S. cents compared with 73.91 cents in late Asian trading June 1. The nation's markets are closed today for the Queen's Birthday public holiday.
By Fergus Maguire
June 4 (Bloomberg) -- The Australian dollar rose, approaching a 17-year high, as prices for metals exported by the nation including gold and copper climbed.
The currency has risen 5.5 percent this year as a measure of six metals on the London Metal Exchange gained 13.6 percent. Mining and energy exports account for half of Australia's shipments. A report today showed Australia's job-vacancy advertisements climbed to a record in May, adding to signs of rising employment that may boost consumer spending.
``The most potent support for the Australian dollar looks to have come from resources,'' Tony Morriss, a Sydney-based currency strategist at Australia & New Zealand Banking Group Ltd., said today in a note to clients. ``All of the commodity currencies received a boost from a surge in gold and metal prices.''
The Australian dollar rose 0.4 percent to 83.22 U.S. cents at 11:37 a.m. in Sydney. The currency traded as high as 83.92 cents on April 19, the most since August 1990.
Gold, Australia's third-biggest commodity export, rose by the most in three months in New York on June 1. Gold futures for August delivery gained $10.20, or 1.5 percent, to $676.90 an ounce. Silver rose 27 cents to $13.74 an ounce. Copper futures in New York had the first weekly gain in a month climbing 0.3 percent to $3.405 a pound.
Jobs advertised in major newspapers and on the Internet rose 10.3 percent from April to an average 251,998 a week, seasonally adjusted, according to an Australia & New Zealand Banking Group Ltd. report released in Melbourne today.
Traders are stepping up purchases of options to bet Australia's dollar will rally against the yen as a strengthening economy bolsters demand for the country's assets. The currency has risen 8.1 percent against the yen this year to 101.38.
`More Upside'
Company profits rose at the fastest pace in almost two years in the first quarter as earnings climbed at banks and retailers. Gross operating profits increased 7.6 percent from the fourth quarter, the Bureau of Statistics said in Sydney today. The median estimate in a Bloomberg News survey of 20 economists was for a 2.9 percent gain.
Speculators are wagering ``there is more upside room for the Australian dollar,'' said Neil Jones, head of European hedge fund sales at Mizuho Financial Group Inc. in London. ``There are still large amounts of money from Japan looking for high yields. Increasing demand for Australian dollar call'' options ``is set to continue.''
Demand is growing for call options granting the right to buy the Australian dollar versus the yen, relative to put options giving the right to sell.
The so-called risk-reversal rate measuring this demand was minus 1.1 percent today on a one-month maturity, compared with minus 2.0 percent reached in April, the lowest since October 2003. A higher risk-reversal rate shows greater demand for calls on the Australian dollar relative to puts.
Elsewhere, New Zealand's dollar was at 74.45 U.S. cents compared with 73.91 cents in late Asian trading June 1. The nation's markets are closed today for the Queen's Birthday public holiday.
**Original Source = Bloomberg.com**
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