Bloomberg News

Aussie Falls From 2-Month High as Stocks Drop on Slowdown

July 05, 2012

Australia’s dollar fell from near a two-month high as Asian stocks dropped amid signs of a global economic slowdown, sapping demand for riskier assets.

New Zealand’s dollar, known as the kiwi, snapped two days of gains against the yen before reports this week that may show German factory orders dropped in May and U.S. payrolls for June concluded the smallest quarterly advance in more than two years. Australian Treasurer Wayne Swan said he will discuss trading between the Chinese yuan and the so-called Aussie next week in Hong Kong.

“What we’ve got to remember is that the global economy faces a number of issues,” said Robert Rennie, chief currency strategist at Westpac Banking Corp. in Sydney. “On the medium- term basis, we still see the Aussie lower.”

Australia’s dollar lost 0.1 percent to $1.0264 at 4:02 p.m. in Sydney, after touching $1.0320 yesterday, the highest since May 3. The currency slid 0.3 percent to 81.87 yen. New Zealand’s dollar weakened 0.1 percent to 80.30 U.S. cents. It declined 0.2 percent to 64.06 yen, after gaining 0.1 percent yesterday.

The MSCI Asia Pacific Index (MXAP) of shares lost 0.2 percent, snapping a six-day advance.

The yield on 10-year Australian government notes dropped nine basis points, or 0.09 percentage point, to 3.11 percent. New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, fell three basis points to 2.79 percent.

Factory orders in Germany, the euro zone’s biggest economy, may have declined 6 percent in May from a year ago, according to the median estimate of economists in a Bloomberg survey before today’s figure. They fell 3.8 percent in April.

U.S. Payrolls

U.S. employers probably increased payrolls by 90,000 workers last month after a 69,000 gain in May, a separate survey showed before the Labor Department reports figures tomorrow. Excluding government agencies, private hiring may have climbed by 100,000, concluding the smallest quarterly advance since the first three months of 2010.

Losses in the South Pacific nations’ currencies were limited before European Central Bank and Bank of England meetings today to discuss ways to provide economic stimulus.

The ECB will probably cut its benchmark interest rate by 25 basis points to a record low 0.75 percent today, while the BOE is forecast to raise its target for bond purchases, according to economists in Bloomberg News surveys.

“You might see the Aussie and kiwi supported a little bit if the BOE and ECB do more stimulus,” said Joseph Capurso, a strategist in Sydney at Commonwealth Bank of Australia. (CBA) “There’s a good chance that the Aussie-euro will soon hit a record high.”

Near Record

The Australian dollar was at 81.92 euro cents from 82.03 yesterday, compared with a record high of 82.42 set on Feb. 7.

Swan said Australia is taking action to promote yuan- Australian dollar transactions. China is Australia’s biggest trading partner.

The yuan’s internationalization “is clearly in the interests of Australian businesses and the broader Australian economy,” Swan said today in a statement e-mailed from his office in Canberra. “Both governments are very keen to see us deepen and broaden this important market.”

A government report today showed Australia’s imports outpaced exports by A$285 million ($293 million) in May, up from a revised A$26 million gap in the prior month.

To contact the reporter on this story: Monami Yui in Tokyo at myui1@bloomberg.net

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


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