The Australian and New Zealand dollars fell ahead of U.S. figures tomorrow forecast to show retail sales rose, reducing the case for additional Federal Reserve stimulus measures.
The Federal Open Market Committee meets tomorrow to set monetary policy. New Zealand’s dollar declined against the yen, halting a three-day advance, after Fonterra Cooperative Group Ltd., the world’s largest dairy exporter, cut its milk price target. The Aussie weakened against most of its 16 major peers before a report tomorrow economists expect to show Australia’s home loans declined.
“A positive retail number in the United States, and something above expectation in particular, could be supportive of the U.S. dollar and negative for the Australian dollar,” said Hans Kunnen, Sydney-based chief economist at St. George Bank Ltd. Lower milk prices are “not helpful for the New Zealand dollar. Commodity prices and attitudes towards nations that are linked into Asian growth have weakened a touch,” he said.
Australia’s dollar weakened 0.8 percent to $1.0496 at 11:24 a.m. in New York. The Aussie fell 1.1 percent to 86.29 yen. New Zealand’s dollar declined 0.7 percent to 81.59 U.S. cents. It dropped 1 percent to 67.10 yen.
U.S. Retail Sales
Retail sales in the U.S. probably increased 1.1 percent in February, the most in five months, according to the median estimate of economists in a Bloomberg News survey before the Commerce Department releases the figures tomorrow.
Fed Chairman Ben S. Bernanke said on Jan. 25, after the FOMC’s last meeting, that policy makers were considering additional asset purchases to boost growth. The Fed has pledged to keep its benchmark rate at almost zero through at least late 2014 and has previously purchased $2.3 trillion of securities in two rounds of so-called quantitative easing.
Auckland-based Fonterra revised its forecast price for milk to NZ$6.35 ($5.18) per kilogram of milk solids, from a NZ$6.50 estimate in December, the company said in a statement today.
The Aussie and kiwi also weakened as China reported on March 10 a February trade shortfall of $31.5 billion, the largest trade deficit since at least 1989. The People’s Bank of China said in a press statement today that it will use interest rates and exchange rates to manage the economy as Europe’s debt crisis damps global demand.
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