Bentham Asset Management, whose flagship fund beat all its Australian peers over the past five years, is avoiding the nation’s “expensive” credit markets to buy asset-backed debt offshore and foreign-currency notes of local banks.
Australia’s dollar has tumbled 15 percent from its high last year and strategists forecast more pain ahead. For Goldman Sachs Group Inc., it’s the perfect time to develop Sydney as a hub for trading local-currency assets.
The euro rallied for a fifth week as European Central Bank President Maro Draghi said he expects inflation in the currency bloc to gradually rise, damping bets that policy makers would reduce the benchmark interest rate.
Stepping up verbal intervention may be the Reserve Bank of Australia’s only option to curb the Aussie as strengthening economic data and a neutral policy stance drive the currency toward a three-month high.
Australia’s central bank Governor Glenn Stevens said he’s not sure how long a flagged period of interest-rate stability will last and doesn’t see the need to further loosen “very accommodative” policy at the moment.
Investors are the most bearish on Australian stocks since 2007 after last month’s rally pushed up valuations by the most since April and the central bank signaled a reluctance to add stimulus to the economy.
The U.S. economy will grow this year at its fastest pace since 2005, helping reduce the annual average unemployment rate for a fourth straight year even as market borrowing costs rise, the Obama administration predicted.