Bloomberg News

Aussie Dollar Drops as Pimco Sees RBA Easing; Kiwi Advances

January 09, 2012

Jan. 9 (Bloomberg) -- The Australian dollar weakened against 15 of its 16 major peers after data showed the South Pacific nation’s retail sales unexpectedly stagnated in November.

The so-called Aussie fell for a fourth day after Pacific Investment Management Co. said the Reserve Bank of Australia will need to ease monetary policy. New Zealand’s dollar, nicknamed the kiwi, was the second-best performer versus the dollar after the leaders of Germany and France said the new budget rulebook for nations of the shared currency may be done a month early.

“The past six months have been an important reminder that small, open economies such as Australia are not immune to the broader global business cycle,” Robert Mead, the head of portfolio management in Australia at Pimco, manager of the world’s biggest bond fund, wrote in an e-mailed report today. “We think the RBA will need to ease further in 2012.”

Australia’s dollar fell 0.1 percent to $1.0214 at 1:01 p.m. New York time. It declined 0.3 percent to 78.52 versus the yen.

New Zealand’s currency rallied 0.6 percent to 78.55 U.S. cents and gained 0.5 percent to 60.38 yen.

German Chancellor Angela Merkel and French President Nicolas Sarkozy met in Berlin today to flesh out a new rulebook for fiscal discipline negotiated at a Dec. 9 summit that seeks to create a “fiscal compact” for the 17-member euro area.

Retail Sales

Australia’s retail sales were unchanged in November, a report from the statistics bureau showed today, compared with the 0.4 percent gain estimated by economists in a Bloomberg News survey.

“Today’s data suggests that consumers remain hesitant to spend up, given weaker prospects for global growth, and supports the view that the RBA will cut rates again,” Janu Chan, an economist at St. George Bank Ltd. in Sydney, wrote in a note about the retail sales data.

Traders are speculating that Australia’s central bank will lower its benchmark interest rate from the current level of 4.25 percent. Cash rate futures indicate the key rate will fall 0.75 percentage point by May.

Statistics New Zealand said today that the country’s imports exceeded exports by NZ$308 million ($240 million) in November, compared with a revised NZ$228 million deficit in October. The median estimate of economists was for a NZ$300 million shortfall.

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

To contact the reporter on this story: Masaki Kondo in Singapore at mkondo3@bloomberg.net

To contact the editor responsible for this story: Garfield Reynolds at greynolds1@bloomberg.net


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