Bloomberg News

Aussie, N.Z. Dollar Drop as Risk Appetite Fades on Europe, China

November 24, 2011

Nov. 23 (Bloomberg) -- The Australian dollar fell to the lowest level in almost seven weeks and New Zealand’s slid to the least since March as concern about Europe’s rising borrowing costs damped demand for higher-yielding assets.

The two South Pacific currencies also dropped after a private report showed Chinese manufacturing probably shrank. The U.S. dollar climbed as Germany missed its bond-auction target today by 35 percent, prompting investors to question bunds’ status as a haven. New Zealand’s dollar, nicknamed the kiwi, has weakened this month against all of its 16 most-traded peers, while the Aussie has fallen versus all but the kiwi.

“The Aussie is under a fair amount of pressure at the moment, with the traditional safe-haven U.S. dollar advancing,” said David Greene, a senior corporate currency dealer at Western Union Business Solutions, a global payment services network. “Europe is still weighing on market sentiment, with yields on bonds surging for some nations.”

Australia’s dollar dropped 1.2 percent to 97.15 U.S. cents at 1:48 p.m. New York time. It touched 96.64, the weakest level since Oct. 6. The currency declined 0.8 percent to 75.12 yen.

New Zealand’s dollar depreciated 0.8 percent to 74.16 U.S. cents and reached 73.86 cents, the lowest level since March 23. The kiwi weakened 0.3 percent to 57.38 yen.

Global stocks extended declines after HSBC Holdings Plc and Markit Economics said a China purchasing managers’ index was at 48.0 for November, according to a preliminary reading, compared with a final reading for October of 51. A number below 50 indicates a contraction. China is Australia’s largest trading partner and New Zealand’s second-biggest export market.

The MSCI World Index of stock sank 1.9 percent, falling for an eighth consecutive day.

Germany missed its 6 billion-euro ($8 billion) maximum sales target at a 10-year bond auction today, drawing total bids of 3.889 billion euros. The bunds drew a yield of 1.98 percent.

--With reporting by Masaki Kondo in Singapore and Allison Bennett in New York. Editors: Greg Storey, Paul Cox

To contact the reporter on this story: Candice Zachariahs in Sydney at czachariahs2@bloomberg.net

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


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