Aussie, N.Z. Dollars Gain on Optimism Europe Risks Fading

The Australian and New Zealand dollars rallied from yesterday’s decline on speculation risks from Europe’s sovereign-debt crisis are receding, boosting demand for higher-yielding assets.
    The so-called Aussie snapped its biggest one-day drop this year after Greek Prime Minister Lucas Papademos won parliamentary approval for a new 130 billion-euro ($172.5 billion) international bailout. Federal Reserve Chairman Ben S. Bernanke will tell Congress today that financial strains in the 17-nation region have eased, according to prepared testimony. Gains in New Zealand’s dollar were tempered as whole-milk powder prices fell for a seventh-straight auction.
   “We’ve been seeing risk assets globally performing well on the back of the more favorable environment in Europe,” said Tim Riddell, head of global markets research in Singapore at Australia & New Zealand Banking Group Ltd. (ANZ) “Our medium-term fundamental forecast is the Aussie will stay solidly bid.”
    Australia’s currency gained 0.2 percent to $1.0495 as of 5:25 p.m. in Sydney after declining 1.2 percent yesterday, the sharpest slide since Dec. 12. The Aussie added 0.2 percent to 87.87 yen after dropping 0.8 percent yesterday, the most since March 12. New Zealand’s dollar rose 0.3 percent to 81.92 U.S. cents and advanced 0.3 percent to 68.58 yen.
Greek Approval
    A total of 213 Greek lawmakers voted today in favor of the legislation to secure aid for the country and 79 against, Acting Parliament Speaker Grigoris Niotis said in remarks carried live on state-run Vouli TV.
    Greece pushed through the biggest sovereign restructuring in history earlier this month after getting private investors to forgive more than 100 billion euros of debt, opening the way for the second bailout.
   “The recent reduction in financial stresses in Europe is a welcome development for the United States,” Fed Chairman Bernanke said in the text of testimony to be delivered today to the House Committee on Oversight and Government Reform.
    Australia’s currency weakened yesterday on concern an economic slowdown in China, the nation’s biggest trading partner, would damp demand for its commodity exports.
    Steel output growth in China has slowed as it puts greater focus on consumers rather than building projects, BHP Billiton Ltd. (BHP), the world’s biggest mining company, said yesterday.
    Earnings from Australia’s minerals and energy exports may total A$199.2 billion ($209 billion) in the year ending June 30, the Bureau of Resources and Energy Economics said in a report today. That compares with a December forecast of a record A$205.8 billion, and A$179.2 billion a year earlier.
Worst Performers
   The Aussie has lost 1.2 percent in the past month and the kiwi has declined 1.4 percent, making them the two worst performers after the yen among the 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes.
   Demand for the New Zealand dollar was limited after Fonterra Cooperative Group Ltd (FCG)., the world’s largest dairy exporter, said milk powder for May delivery dropped to $3,316 a metric ton, the lowest since Oct. 5.
   “There’s a very strong correlation between the prices that are fixed in the auction to the kiwi dollar,” said Jeremy Jukes, a foreign-exchange dealer in Auckland at Velocity Trade Ltd., referring to Fonterra’s sale. A drop in milk prices “has certainly weighed down on the kiwi.”
   Fonterra, which accounts for about 40 percent of the global trade in dairy products, last week cut its forecast payment to New Zealand farmers by 2.3 percent. Increased supply of milk products and concern that weaker economic growth will curb demand is bringing down prices, Chief Executive Officer Theo Spierings said.

New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, gained two basis points, or 0.02 percentage point, to 3.13 percent.

Euro Gains After Greece Bailout Vote, Before German PMI

    The euro advanced against the dollar and reached a four-month high versus the yen after Greece won parliamentary approval for a new international bailout, boosting demand for European assets.
     The 17-nation currency rose against most major peers before reports tomorrow forecast to show an expansion of services and factory output in Germany, Europe’s largest economy. The dollar weakened before Federal Reserve Chairman Ben S. Bernanke tells Congress that financial strains in Europe have eased, according to testimony prepared for delivery today. Demand for the yen was limited before data tomorrow projected to show Japanese exports declined for a fifth month.
    “Some of the reports coming out of Europe and the Greek vote going through is supportive of the euro in the near term,” said Derek Mumford, a director in Sydney at Rochford Capital, a currency-risk management company.
    The euro rose 0.4 percent to $1.3276 as of 2:02 p.m. in Tokyo. The shared currency climbed 0.3 percent to 111.08 yen and earlier touched 111.15, the most since Oct. 31. The yen traded at 83.68 per dollar from 83.70.
    Greek Prime Minister Lucas Papademos won approval for a 130 billion-euro ($172 billion) aid package. A total of 213 lawmakers voted today in favor of the legislation and 79 against, Acting Parliament Speaker Grigoris Niotis said in remarks carried live on state-run Vouli TV.
German Economy
     Demand for the euro was also supported before the release of purchasing managers indexes tomorrow from London-based Markit Economics predicted to show German manufacturing and services growth accelerated. A measure of factory output climbed to 51 this month from 50.2 in February while a gauge of services rose to 53.1 from 52.8, according to median projections in Bloomberg News surveys of economists.
    The euro may extend gains against the Australian dollar, JPMorgan Chase & Co. said, citing trading patterns.
The common currency may climb toward A$1.2775, around the 3    8.2 percent retracement of the euro’s decline from the Nov. 23 high of A$1.3810 to the Feb. 7 low of A$1.2133 on the Fibonacci chart, Niall O’Connor, a New York based technical analyst at JPMorgan, wrote in a note to clients today.
     The shared currency was at A$1.2657 from A$1.2619 yesterday, after earlier touching A$1.2659, the strongest since Jan. 2.
      The euro has climbed 0.9 percent in the past month, according to Bloomberg Correlation-Weighted Indexes, which track 10 developed-nation currencies. The greenback advanced 0.6 percent, and the yen weakened 4.7 percent.
Japanese Trade
     Japanese exports dropped 6.5 percent in February from a year earlier, following a 9.3 percent decline the previous month, the Ministry of Finance is projected to say tomorrow, according to a Bloomberg poll of economists.
      “We’re starting to see a persistent trade deficit take hold in Japan, and that’s reducing appetite for the yen,” said Marito Ueda, senior managing director in Tokyo at FX Prime Corp. (8711), a currency margin company.
      The South Korean won and Indonesian rupiah fell as Asian stocks declined and on concern China’s slowing economy will damp demand for exports from Asia.
     “The market has got in its mind the recovery in the U.S. is stronger than it is in Asia,” said Gavin Stacey, chief interest-rate strategist at Barclays Capital Inc. in Sydney. “While the market has that mindset, the U.S. dollar strength relative to Asian currencies” is likely to continue, he said.
U.S. Recovery
     The dollar has been supported as data signaled the U.S. recovery is gathering momentum. An industry report today is forecast to show U.S. home sales rose to the highest level since May 2010. Sales of previously owned homes are predicted to have climbed 0.9 percent to a 4.61 million annual rate, according to a Bloomberg survey of economists before today’s report from the National Association of Realtors.