Bloomberg News

Aussie, N.Z. Dollars Decline Amid Slowing Global Economic Data

September 04, 2012

The Australian and New Zealand dollars fell to more than one-month lows versus the greenback as crude-oil futures and stocks declined amid reduced demand for riskier assets.

The two South Pacific nations’ currencies weakened after a report showed manufacturing in the U.S. contracted for a third month and before reports today that may show retail sales in the euro area declined and services contracted. The New Zealand dollar fell versus all but one of its most-traded peers after the Reserve Bank of New Zealand said it will keep its cash rate at 2.5 percent until 2014.

Weaker manufacturing figures “weighed on the outlook for global growth,” Eric Viloria, senior currency strategist at Gain Capital Group LLC in New York, wrote yesterday in a note to clients. “As a result, high-beta currencies were under pressure.” High-beta currencies tend to have the greatest volatility.

The Aussie fell 0.2 percent to $1.0225 in New York yesterday, after earlier declining as much as 0.3 percent to its lowest level since July 25. The currency was little changed at 80.19 yen.

New Zealand’s dollar, known as the kiwi, decreased 0.4 percent to 79.45 U.S. cents, after sinking as much as 0.7 percent to its lowest level since July 26. The kiwi fell 0.2 percent to 62.31 yen.

Crude oil futures declined 1 percent to $95.54 a barrel in New York and the Standard & Poor’s 500 Index (SPX) fell 0.1 percent.

Retracement Decline

The Australian dollar may be set for further declines against the yen as it tests a support area defined by a so- called Fibonacci retracement level, UBS AG said.

The Aussie has been testing 80.10 yen, the 38 percent Fibonacci retracement of its advance from a low of 74.48 on June 1 to a high of 83.58 on Aug. 21, Richard Adcock, head of fixed- income technical strategy in London, wrote in an e-mailed note to clients. The currency may head toward 79.54 yen and then to 79.03 yen, Adcock wrote.

The Australian dollar-yen cross “has been under selling pressure,” Adcock wrote. “With the recent weakness seeing daily and weekly trending tools turn negative, the picture is bearish.”

To contact the reporter on this story: Joseph Ciolli in New York at jciolli@bloomberg.net

To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net


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