Australian Dollar, Metals Rise on Growth Outlook; Stocks Gain

The Australian dollar rose and commodities gained on evidence economies are rebounding from the first global recession since World War II. Stocks and U.S. index futures advanced, while returns on emerging-market bonds climbed to the highest level in at least 16 years.

Australia’s currency strengthened 1 percent against the dollar at 8:50 a.m. in New York and the Dollar Index fell 0.8 percent. The MSCI World Index of 23 developed markets added 0.8percent. Standard & Poor’s 500 Index futures rose 0.6 percent.Gold rallied 1.2 percent to a record $1,182.95 an ounce in
London, and lead paced gains in industrial metals.



A report today showed consumer spending in America increased more than economists estimated, a day after the Federal Reserve raised its forecast for 2010 U.S. growth to arange of 2.5 percent to 3.5 percent, from 2.1 percent to 3.3 percent. Australian central bank Deputy Governor Ric Battellino said the economy has entered a “new upswing,” while the U.K. reported that gross domestic product shrank 0.3 percent in the
third quarter, better than the initial 0.4 percent estimate.

"The macro setting is clearly improving,” said Franz Wenzel, deputy director of investment strategy at Axa Investment Managers in Paris, in a Bloomberg Television interview. Axa oversees about $600 billion. “GDP is going to continue to expand and central banks will remain fairly accommodative.”

Pound Climbs

The Australian dollar led gains by so-called commodity currencies, climbing against 15 of its 16 of most-traded counterparts. The pound rose 0.7 percent compared with the dollar and 0.1 percent versus the euro, snapping a five-day decline against the single European currency. The yen advanced 1 percent against the dollar after a government report showed Japan’s exports fell at the slowest pace in a year last month.

The Swiss franc strengthened past parity with the dollar for the first time since April 2008. The currency appreciated as much as 0.9 percent to 0.9994.

The falling dollar sent gold to record highs in New York, London and Shanghai, helped by a report in the Financial Chronicle newspaper that India may purchase more bullion for its central bank reserves. Three-month lead gained 2 percent to $2,380 a metric ton on the London Metal Exchange, and copper
advanced 1.1 percent to $6,945 a ton.

Soybeans for January delivery climbed for a second day in Chicago, rising 0.8 percent to $10.54 a bushel, on speculation demand will increase in China, the world’s biggest oilseed importer. Wheat for March delivery climbed 10.75 cents, or 1.9 percent, to $5.6425 a bushel, rebounding from a five-day, 7.2 percent retreat.

European Stocks

The Dow Jones Stoxx 600 Index of European shares added 0.7 percent as raw-material producers climbed with metals. BHP Billiton Ltd., the world’s largest mining company, advanced 2.8 percent in London.

France Telecom SA gained 1.9 percent in Paris. Europe’s third-biggest phone company will merge its Orange Switzerland unit with TDC A/S’s Sunrise Communications SA division to expand in Switzerland and pay 1.5 billion euros ($2.25 billion) for a majority stake.

The MSCI Asia Pacific Index added 1.3 percent. Fuji Heavy Industries Ltd., the maker of Subaru cars, rose 5.3 percent in Tokyo after the exports data.

U.S. stock-index futures climbed as reports on consumer spending and initial-jobless claims suggested the recovery from the deepest recession since World War II may be gaining momentum. Trading may be slower than usual as investors leave early for the Thanksgiving holiday tomorrow.

Consumer Spending

A Commerce Department report showed consumer spending increased 0.7 percent last month, beating the median estimate of 0.5 percent from economists surveyed by Bloomberg News. Separate data from the Labor Department indicted that the number of Americans filing claims for unemployment benefits fell to
466,000 last week, the lowest level since September 2008.

Orders for goods meant to last several years unexpectedly fell 0.6 percent in October, a separate U.S. report showed.Emerging-market bond yields fell 4 basis points relative to U.S. Treasury notes, pushing JPMorgan Chase & Co.’s benchmark Emerging Markets Bond EMBI+ Index of total returns to a record
high of 496. The index measures the average return on emerging-market international bonds since December 1993. The MSCI Emerging-Markets Index of equities gained 0.7 percent. South Africa’s rand climbed 1.3 percent against the dollar, leading gains in developing-nation currencies.

Vietnam, Federal Reserve

Vietnam’s central bank devalued its currency and raised interest rates to rein in inflation and a widening trade deficit that’s eroding confidence in the dong. The State Bank of Vietnam lowered the reference rate 5.2 percent to 17,961 against the dollar, after the gap between spot and black-market rates widened to the most in a decade. Policy makers narrowed the dong’s daily trading band to 3 percent, from 5 percent, effective tomorrow.

Fed officials are concerned that record-low interest rates might fuel “excessive” speculation in financial markets and possibly dislodge expectations for low inflation, according to minutes of their Nov. 3-4 meeting published yesterday. The European Central Bank is debating whether to modify the loans it makes available as it starts to scale back support for the region’s banks.

Treasuries fell, with the yield on the 10-year note rising 2 basis points to 3.32 percent, according to BGCantor Market Data. The U.S. is scheduled to auction a record $32 billion of seven- year notes today, the third sale of securities this week.

(Currency News by Bloomberg)