By Hamish Risk
Sydney, Nov. 9 (Bloomberg) -- The Australian dollar, little changed, may rise on expectations global interest rate reductions will increase demand for the nation's commodity exports and the currency to buy them.
The Australian dollar, or Aussie, held at 51.35 U.S. cents. It gained 1 percent in the past five days and is the third best performer against the U.S. dollar of 17 major currencies in that time. The European Central Bank and the Bank of England yesterday trimmed interest rates a half percentage point, following a half- point cut by the Federal Reserve on Tuesday.
``The market is giving the benefit of the doubt to central banks, that the rate cuts will kick start the world's economies,'' said Greg McKenna, currency strategist at National Australia Bank Ltd. ``That belief will support Aussie.''
Australia sells about 20 percent of its products abroad and is the biggest exporter of zinc, wool, beef, iron ore and coal.
The U.S. economy, the world's biggest and Australia's second- biggest trading market, shrank 0.4 percent in the three months through September and is likely to contract further this quarter, economists say.
Further Australian Rate Cuts
Australia's central bank is expected to trim its benchmark interest rate, currently at 4.5 percent, after a government report yesterday showed unemployment last month rose to its highest level in almost 2 1/2 years.
Nineteen of 20 economists surveyed by Bloomberg News expect the central bank to decide on lowering its overnight cash target rate at least a quarter point when its policy-makers meet on Dec. 4.
The implied yield on Australia's 90-day bank bill futures contract -- a barometer of interest rate expectations -- is at 3.98 percent. That's the lowest level since at least 1990, and signals investors expect a further half percentage point cut.
The New Zealand dollar, fell to 41.87 U.S. cents, little changed from 41.97 yesterday.