Bloomberg News

Aussie May Drop to 14-Month Low, BofA Says: Technical Analysis

November 24, 2011

Nov. 23 (Bloomberg) -- Australia’s dollar may weaken to a more than one-year low against its U.S. counterpart after breaking through key technical levels, according to Bank of America Corp.

The Aussie, as the currency is nicknamed, may fall to as low as 93.30 U.S. cents, the lowest since September 2010, after breaking below the 99.27-98.50 range, or the highs reached in 2008, said MacNeil Curry, head of foreign exchange and interest rates technical strategy at Bank of America in New York.

“Especially with equities and risk coming under further pressure, Aussie is likely to remain under pressure as well,” Curry said in a telephone interview.

Australia’s currency fell 1.2 percent to 97.11 U.S. cents at 1:18 p.m. New York time. It has weakened 7.7 percent against the greenback this month, the second-worst performance among the major currencies after New Zealand’s dollar.

Currencies of higher-yielding countries have slumped this month as Europe’s sovereign debt crisis damps demand for riskier assets. The MSCI World Index of stocks has dropped 5.7 percent in November.

Germany failed to get bids for 35 percent of the 10-year bonds offered for sale today, sending its borrowing costs higher and the euro lower on concern that Europe’s debt crisis is driving investors away from the region.

A break in the Aussie below the 94.03-93.30 levels may drive the currency to 90 U.S. cents during the next few years, Curry said.

--Editors: Paul Cox, Greg Storey

To contact the reporter on this story: 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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