Australia’s dollar dropped against most of its 16 major peers after Treasurer Wayne Swan said meeting a budget-surplus goal will require spending cuts.
The Aussie fell to a two-month low against its U.S. counterpart amid concern Chinese manufacturing is losing momentum, curbing demand for the nation’s commodity exports. New Zealand’s dollar reached a five-month high against its Australian counterpart after data showed business confidence improved in the smaller nation and as traders increased bets that Australia’s central bank will cut interest rates.
“Over the next one to three months, we will go lower” in the Australian currency, said Imre Speizer, a strategist in Auckland at Westpac Banking Corp. (WBC), Australia’s second-largest lender. “The main reason for that will be slower economic growth globally. Particularly important will be the slowing growth in China.”
The Aussie fell 0.6 percent to $1.0322 as of 11:37 a.m. in New York and touched $1.0305, the lowest since Jan. 17. The New Zealand dollar, known as the kiwi, dropped 0.5 percent to 81.27 U.S. cents.
The Australian dollar has lost 3.8 percent against the U.S. currency this month, paring its yearly gain to 1.1 percent. The kiwi has fallen 2.6 percent in March and has gained 4.6 percent this year.
Contemporary and structural budget influences “are combining to make that surplus much more difficult to achieve,” Swan said in a speech today. “The reality is that we will need to cut and cancel existing programs if we are to meet” the government’s surplus targets.
A flash reading for Chinese manufacturing this month was at 48.1, below the 50 level that divides expansion from contraction, and compared with a final 49.6 in February HSBC Holdings Plc and Markit Economics said March 22.
The China Federation of Logistics & Purchasing will issue its purchasing managers’ index on April 1, with economists predicting a 50.6 figure. The nation is Australia’s largest overseas market and New Zealand’s second-biggest export destination.
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