Bloomberg News

Aussie Dollar Trades Below One-Week High on U.S. Growth Concern

January 12, 2012

Jan. 13 (Bloomberg) -- The Australian dollar traded below a one-week high amid concern U.S. economic growth may be weaker than forecast, sapping demand for riskier assets.

The New Zealand dollar extended yesterday’s drop following a report that showed U.S. retail sales increased less than projected and before data that may indicate a wider trade deficit for the world’s largest economy. Declines in the so- called Aussie and kiwi were limited as Asian stocks rallied after European Central Bank President Mario Draghi said his strategy for tackling Europe’s crisis is beginning to work.

“The risks to the European economy and to the broader global economy are still to the downside,” said Joseph Capurso, a currency strategist in Sydney at Commonwealth Bank of Australia. “That suggests that there’s a cap on commodity prices and commodity currencies like the Aussie and kiwi.”

Australia’s dollar slipped 0.2 percent to $1.0317 at 1:50 p.m. in Sydney from $1.0333 in New York yesterday, when it rose as high as $1.0378, the strongest level since Jan. 4. The Aussie was at 79.18 yen from 79.32 yesterday.

New Zealand’s currency slipped 0.3 percent to 79.15 U.S. cents from yesterday, when it fell 0.4 percent. It slid 0.3 percent to 60.74 yen.

The Thomson Reuters/Jefferies CRB Index of raw materials fell 1.2 percent yesterday.

U.S. Economy

The U.S. trade deficit probably widened to $45 billion in November, according to the median forecast of economists surveyed by Bloomberg News before the Commerce Department publishes its figures today.

Data released yesterday indicated sales at U.S. retailers climbed 0.1 percent in December, less than the 0.3 percent gain predicted in a Bloomberg survey.

A separate report showed new applications for unemployment benefits climbed by 24,000 to 399,000 in the week ended Jan. 7. Four of the five previous weekly reports showed a decline in initial claims.

Investors were “getting too bullish about the fall in the jobless claims in December, same thing with the retail trade,” said Commonwealth Bank’s Capurso. He expects the Australian dollar to fall to 98 U.S. cents by the end of this quarter, and the kiwi to decline to 75 U.S. cents.

Losses in the South Pacific currencies were limited after the ECB president said yesterday in Frankfurt that while “substantial downside risks” remain, there are “tentative signs” that the euro-area economy is stabilizing. European policy makers left their benchmark rate unchanged at 1 percent yesterday.

The MSCI Asia Pacific Index of stocks jumped 0.5 percent, following a 0.3 percent gain in the MSCI World Index yesterday.

Australia’s government bonds fell, with the yield on 10- year notes climbing five basis points, or 0.05 percentage point, to 3.80 percent.

--Editors: Benjamin Purvis, Naoto Hosoda

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

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


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