Australian Dollar Climbs Up Based on Japan Stimulus

Australian Dollar, often called as Aussie, experienced a surge because of the speculation that Japan will be increasing spending, so that its economy can be bolstered. If this move happens, this will support demand for the assets which are linked to global growth. Today’s surge of Aussie was actually the biggest in all of the developed market currencies. Aussie is currently traded at $1.0469. It also advanced by 0.2% against Kiwi, the New Zealand Dollar and is currently priced at NZ$1.2627. Aussie was also supported by the building approvals and increase in retail sales of Australia, according to currency analysts.

The fate for the Kiwi was not good though. It was impacted by the sudden halt of the Asian shares and thereby weakened against most of its peers. The Kiwi actually went down by 0.3% if compared with USD. It is currently priced at 82.90 US Cents per Kiwi. The MSCI Asia Pacific Index of shares also slumped by 0.3% today, retreating from its surge that of 1.8% experienced in last week.

According to the strategist of Mizuho Securities Co., Kengo Suzuki, any sort of accelerated rebound in the economy of Japan will be beneficial for the Australian Dollar, considering the fact that the two countries share deep economic relation. He added that investors are almost certain to be bullish on the Australian Dollar currently.

The benchmark 3-year Government note yields of Australia also reached its peak since 17th August. It touched 2.87%, only to finish the day at 2.83% marking decline of 2 basis points since 4th January. The 2-year swap rates of New Zealand, on the other hand, was more or less unchanged at 2.78% after heading to 2.8%, the best value since 17th August.

Incidentally, the Japanese Government is thinking of implementing an extra budget plan which will have $68 billion worth money reserved for public works. The news was reported by the Yomiuri newspaper, without citing the source. Incidentally, Japan is the biggest export market of Australia, after the Asian powerhouse China.

The current benchmark interest rate of Australia is set at 3% and economists predict that the same will be cut down to 2.75% or even lower in March. Jonathon Cavenagh, who works as the currency strategist of Westpac Banking Corp. stated that both New Zealand and Australian Dollar should be witnessing a near-term consolidation now.