Australia, N.Z. Dollars Extend Gains on Improved Risk Appetite

[Enivid]

The Australian and New Zealand dollars extended gains from last week as improved risk appetite boosted demand for high-yielding assets.

The currencies also climbed as prices advanced for commodities the nations export, including oil, wheat and beef. Crude oil climbed for a third day on intensifying conflict in the Middle East. U.S. stocks climbed to a two-month high on Jan. 2, following the market’s worst annual drop since the Great Depression, as General Motors Corp. got its first cash infusion from the government and rising oil prices lifted energy shares.

“The Aussie and the kiwi dollars have continued from their strong finish on Friday night due to an improved risk environment and some optimism for equity inflows,” said Robert Rennie, chief currency strategist at Westpac Banking Corp. in Sydney, referring to the currencies by their nicknames. “The deteriorating situation in Israel also has the potential to boost crude prices.”

Australia’s currency touched as high as 71.62 U.S. cents and traded at 71.37 cents as of 5:02 p.m. in Sydney, compared with 71.13 cents in late trading on Jan. 2 in New York. It rose to 65.60 yen from 65.35 last week.

“An improvement in equity markets and risk appetites has likely spurred the Australian dollar higher,” Amanda Tan, an economist at St. George Bank Ltd. in Sydney, wrote today in a note to clients.

The benchmark S&P/ASX 200 Index of Australian stocks rose as much as 1.5 percent before slipping to close down 0.7 percent. The MSCI Asia Pacific Index gained 1.3 percent.

From Bloomberg News.