Bloomberg News

Aussie Dollar Falls as Trade Surplus Narrows, Moody’s Warns EU

December 12, 2011

Dec. 12 (Bloomberg) -- Australia’s dollar declined after a report showed the nation’s trade surplus narrowed by more than economists estimated, adding to signs Europe’s sovereign-debt crisis is weighing on growth worldwide.

The Australian and New Zealand dollars declined as global equities and commodity prices tumbled after Moody’s Investor Service said it will review the credit ratings of European Union nations after last week’s summit. New Zealand’s dollar fell to the lowest in almost two weeks after New Zealand Institute of Economic Research’s Consensus Forecasts survey showed economic recovery will be slower than previously thought.

“The European crisis is a downer on the Aussie economy,” said Imre Speizer, a strategist in Auckland at Westpac Banking Corp., Australia’s second-largest lender. “We had a very strong rally in both of those currencies since Friday evening and they are taking a rest.”

The Australian dollar fell 1.4 percent to $1.0071 at 12:39 p.m. New York time. It dropped 1.1 percent to 78.44 yen.

New Zealand’s currency slid 1.7 percent to 76.24 U.S. cents and declined 1.3 percent to 59.38 yen.

The MSCI World Index of stocks slid as much as 2 percent and Standard & Poor’s 500 Index tumbled 2 percent. The S&P GSCI Index of 24 raw materials sank 1.2 percent.

Trade Surplus Narrows

Australia’s trade surplus narrowed to A$1.6 billion ($1.63 billion) in October from a revised A$2.25 billion in September, the Bureau of Statistics said in Sydney today. The median estimate in a Bloomberg News survey of 20 economists was for a surplus of A$2 billion.

The number of loans granted to build or buy houses and apartments in Australia rose 0.7 percent in October from a month earlier, while the value of loans fell 2.5 percent to A$20.5 billion, a separate report showed today. Seventeen economists in a Bloomberg poll expected the number of approvals to be unchanged.

Reserve Bank of Australia Governor Glenn Stevens lowered the overnight cash-rate target to 4.25 percent from 4.5 percent on Dec. 6, citing “considerable turbulence” in financial markets and an increased chance of a “further material slowing in global growth.”

European leaders unveiled a blueprint after meetings on Dec. 8 and 9 for a closer fiscal accord, adding 200 billion euros to their bailout fund and tightening rules to curb future debts. They also said they would start a 500 billion-euro rescue fund next year.

--With assistance from Allison Bennett in New York. Editors: Kenneth Pringle, Paul Cox

To contact the reporter on this story: Mariko Ishikawa in Tokyo at mishikawa9@bloomberg.net

To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net


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