Bloomberg News

Aussie, N.Z. Dollars Drop Most in 7 Weeks Against Yen on Europe

November 13, 2011

Nov. 11 (Bloomberg) -- The Australian and New Zealand dollars had their biggest five-day declines against the yen in seven weeks amid concern Europe’s sovereign-debt crisis will weigh on global growth.

The Aussie fell for a second week versus the U.S. dollar before a report on Nov. 15 that may show economic growth in the euro area failed to accelerate. The Aussie and kiwi, as New Zealand’s dollar is known, both pared weekly losses today as renewed optimism European leaders are taking steps to contain their debt crisis increased appetite for riskier assets.

“A slowdown in the global economy has big influence over the Australian and New Zealand dollars,” said Toshiya Yamauchi, a senior currency analyst in Tokyo at Ueda Harlow Ltd., which provides foreign-exchange margin-trading services. “European nations will have to cut expenditure further to resolve the region’s debt problem, which in turn diminishes consumer spending.”

Australia’s currency fell 2.1 percent this week, the most since the five days ended Sept. 23, to 79.48 yen. It was up 0.8 percent today at 1:13 p.m. New York time. The Aussie gained 1.3 percent today to $1.0290, paring its weekly loss to 0.8 percent.

The New Zealand dollar fell 2.2 percent over the past five days, also the most since the week ended Sept. 23, to 60.74 yen. It rose 0.6 percent today. The kiwi lost 0.9 percent on the week and appreciated 1.2 percent on the day to 78.64 U.S. cents.

Lowest Since 2009

The euro area’s gross domestic product grew 0.2 percent in the third quarter, economists in a Bloomberg News survey forecast before the European Union’s statistics office reports the data. The level is the lowest since the three months ended June 2009, when the European economy contracted.

The European Commission yesterday cut the region’s growth forecast for 2012 to 0.5 percent from 1.8 percent.

Stocks rallied today, driving the MSCI World Index of equities up 2.3 percent, as former European Central Bank Vice President Lucas Papademos was sworn in as prime minster of Greece and Italy’s Senate approved a debt-cutting bill.

“We have the tensions in the market in general easing,” said Kathy Lien, director of currency research at the online trading firm GFT Forex in New York. “A leadership change in Italy means that the prospect for more volatility and more slides in equities has declined, and for risky assets, that’s good.”

Goldman Sachs Group Inc. lifted its forecasts for Australia’s and New Zealand’s dollars, according to a report dated yesterday. The firm predicted the Aussie will be at $1 in three months and will rise to as much as $1.05 in 12 months,, compared with prior projections of 95 U.S. cents and $1. The New Zealand dollar will be at 77 U.S. cents in three months and 84 U.S. cents in a year, compared with earlier estimates of 74 cents and 82 cents, the report showed.

--With assistance from Kristine Aquino in Singapore. Editors: Greg Storey, Dennis Fitzgerald

To contact the reporters on this story: Masaki Kondo in Singapore at mkondo3@bloomberg.net; Catarina Saraiva in New York at asaraiva5@bloomberg.net

To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net


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