Bloomberg News

Aussie Weakens Amid RBA Rate-Cut Speculation; N.Z. Dollar Falls

October 01, 2012

The Australian dollar reached the lowest level in three weeks against its U.S. counterpart amid speculation the Reserve Bank of Australia will cut interest rates at a policy meeting today.

The Aussie weakened as swaps indicated an 82 percent chance the RBA will lower its benchmark rate by a quarter-percentage point to 3.25 percent. A private gauge showed yesterday Australian manufacturing contracted at a faster pace in September as employment fell and new orders shrank for a seventh month. New Zealand’s dollar declined for a second day against the greenback as appetite for riskier assets slipped.

“The Australian dollar undulated according to the whims of the market’s risk appetite,” Ravi Bharadwaj, a market analyst in Washington at Western Union Business Solutions, a unit of Western Union Co., wrote yesterday in a note to clients. “Tuesday’s Reserve Bank of Australia rate decision should bring a swift end to the Aussie’s doldrums.”

Australia’s currency depreciated 0.2 percent to $1.0361 yesterday in New York after earlier reaching $1.0326, its lowest level since Sept. 11, and rising to $1.0404. It declined 0.1 percent to 80.81 yen after falling earlier to 80.46 yen.

New Zealand’s dollar, nicknamed the kiwi, weakened 0.3 percent to 82.76 U.S. cents. The kiwi slipped 0.2 percent to 64.56 yen.

China Stimulus

Declines in the two South Pacific currencies were limited as a gauge showing a contraction in China’s manufacturing added to speculation the nation will expand stimulus to spur growth in the world’s second-largest economy.

A purchasing managers’ index of manufacturing was at 49.8 in September, the National Bureau of Statistics and China Federation of Logistics and Purchasing said. The median estimate of economists surveyed by Bloomberg was for a rise to 50.1. China is Australia’s biggest trading partner and New Zealand’s second-largest export market.

The New Zealand dollar has strengthened 4.6 percent this year, the biggest increase among the 10 developed-nation currencies monitored by the Bloomberg Correlation-Weighted Indexes. The Aussie has fallen 0.9 percent, and the greenback is down 2.5 percent.

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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