Bloomberg News

Aussie, N.Z. Dollars Drop Amid Concern Global Economy Faltering

September 28, 2011

Sept. 28 (Bloomberg) -- The Australian and New Zealand dollars weakened against their Japanese and U.S. counterparts before data that may signal the global economy is struggling to recover, damping demand for higher-yielding assets.

The so-called Aussie dropped against all of its 16 major counterparts after a report confirmed gross domestic product growth stalled in France and before data estimated to show bookings for U.S. durable goods declined. New Zealand’s currency fell as Finance Minister Bill English said it’s “quite possible” the nation may earn less from exports in the near term as commodity prices retreat from unsustainable levels.

“Every day we’re getting new pieces of a puzzle, and it’s very difficult to trade,” said Kurt Magnus, executive director of currency sales in Sydney at Nomura Holdings Inc., Japan’s biggest brokerage. For the Australian currency to go back to parity with the dollar “we need more positivity,” he said.

The Australian dollar fell to 75.45 yen as of 4 p.m. in Sydney from 76.15 yen in New York yesterday. It weakened to 98.54 U.S. cents from 99.14 cents, after dropping below parity on Sept. 22. New Zealand’s currency slid to 60.04 yen from 60.57 yen, and declined to 78.41 U.S. cents from 78.85 cents.

Crude oil fell as much as 2.1 percent in afterhours trading on the New York Mercantile Exchange and copper on the London Metal Exchange dipped as much as 4.5 percent.

U.S., France Data

France’s statistics office confirmed today that gross domestic product was unchanged in the second quarter from the preceding period, when it increased 0.9 percent. That was in line with the initial estimate reported last month.

Bookings for U.S. durable goods, which are meant to last at least three years, probably dropped 0.2 percent last month after climbing in July, according to the median estimate of economists in a Bloomberg News survey before today’s report.

“Nerves are raw, patience is low, and room for political maneuvering is narrow,” Greg Gibbs, a currency strategist at Royal Bank of Scotland Group Plc in Sydney, wrote in a note to clients. “We still see a high risk that the Australian dollar makes new lows before the year is out.”

The Aussie may slide to 93 U.S. cents by December before recovering to 95 in the first quarter of 2012 and $1.10 in the July-to-September period, Gibbs wrote.

Home Sales

Australia’s currency maintained losses even after sales of newly built dwellings rebounded 1.1 percent in August following three consecutive monthly declines, according to data released today by the Canberra-based Housing Industry Association.

Homeowners are increasingly pessimistic about the housing market, a National Australia Bank Ltd. survey showed. Home prices are expected to fall 1 percent over the next year, Australia’s fourth-largest lender said in an e-mailed report.

Demand for New Zealand’s dollar, known as the kiwi, was limited on speculation declining commodity prices will reduce the South Pacific nation’s earnings from exports.

Lower prices “represent some risk to our export earning capacity,” Finance Minister English told Radio New Zealand’s Morning Report today. “There are signs that as commodity prices become a bit less heated the exchange rate will come back as well and that would cushion us to some extent,” he said.

The kiwi has depreciated 1.3 percent in the past month, according to Bloomberg Correlation-Weighted Indexes, a measure of 10 developed-nation currencies. Its Australian counterpart lost 1.4 percent.

Australia’s benchmark 10-year yield climbed five basis points, or 0.06 percentage point, to 4.25 percent. New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, was at 3.13 percent from 3.16 percent yesterday.

--With assistance from Tracy Withers in Wellington. Editors: Nate Hosoda, Rocky Swift

To contact the reporters on this story: Kristine Aquino in Singapore at; Mariko Ishikawa in Tokyo at

To contact the editor responsible for this story: Rocky Swift at

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