Oct. 17 (Bloomberg) -- The Australian dollar weakened before the Reserve Bank of Australia releases minutes tomorrow of its meeting on Oct. 4, when Governor Glenn Stevens signaled there’s more scope to cut interest rates if necessary.
The Aussie snapped a three-day advance versus its U.S. counterpart on speculation its climb to a one-month high was excessive. New Zealand’s dollar slid after a report showed the nation’s services industry slowed in September.
“After such a big move, the Australian dollar getting a few wobbles is certainly understandable,” said Gavin Stacey, chief interest-rate strategist at Barclays Plc in Sydney. “You become more susceptible to downside surprises for any disappointment on RBA or the global policy front.”
Australia’s dollar declined 1 percent to $1.0232 at 1:23 p.m. New York time after touching $1.0372, the highest level since Sept. 16. It surged 5.9 percent last week, the most since February 2009. The currency fell 1.6 percent to 78.56 yen. The New Zealand dollar slid 1.1 percent to 79.68 U.S. cents and depreciated 1.6 percent to 61.17 yen.
The Australian dollar’s 10-day relative strength index versus its U.S. counterpart was at 68.37 on Oct. 14, near the level of 70 that some traders see as a sign that an asset’s price may reverse direction after rising too rapidly.
Stevens said earlier this month in a statement accompanying the RBA’s decision to leave its target rate unchanged at 4.75 percent that “an improved inflation outlook would increase the scope for monetary policy to provide some support to demand, should that prove necessary.”
Traders are betting the RBA will cut its cash target by at least 25 basis points, or 0.25 percentage point, by the end of this year, cash rate futures show.
“The market has seen interest rate expectation for an easing near term being scaled back somewhat,” Barclay’s Stacey said. Investors may be “a little bit wary that the RBA minutes would provide further clarification on why the RBA shifted a little bit to the dovish side,” he said.
An index for New Zealand’s service industry fell to 53.2 in September from a revised 53.8 in the previous month, Bank of New Zealand Ltd. and Business New Zealand, a Wellington-based employer group, said on the Business New Zealand website. A reading above 50 indicates expansion.
--With assistance from Monami Yui in Tokyo and Allison Bennett in New York. Editors: Dennis Fitzgerald, Greg Storey
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