Bloomberg News

Aussie Falls Versus Peers Amid Europe, Slowdown Concerns

November 13, 2012

Australia’s dollar declined, trimming a gain from yesterday, as concern Europe’s debt crisis is weighing on global growth reduced demand for riskier assets.

The so-called Aussie fell against most of its major peers after data showed business confidence weakened in Australia and before a report on German economic sentiment. Demand for the New Zealand dollar was limited as Asian stocks dropped.

“Europe looks like it’s heading towards recession, if not already in recession, which is having a drag on the global economy,” said Derek Mumford, a Sydney-based director at Rochford Capital, a currency risk-management company. “Commodity prices are well off their highs from earlier on in the year and last year. The Aussie is vulnerable to the downside.”

The Aussie dollar lost 0.2 percent to $1.0409 as of 6:17 p.m. in Sydney from yesterday when it gained 0.4 percent. The Aussie weakened 0.5 percent to 82.48 yen. New Zealand’s currency was little changed at 81.70 U.S. cents. It lost 0.4 percent to 64.75 yen.

The MSCI Asia Pacific index of stocks declined 0.6 percent.

New Zealand’s food prices fell 0.6 percent in October from the previous month, when they dropped 0.9 percent, the statistics bureau said in Wellington today.

Business Confidence

A business confidence index for Australia slipped to minus 1 from zero in September, National Australia Bank Ltd. said in Sydney today, based on its survey of more than 400 companies taken Oct. 18-31. The business conditions gauge, a measure of hiring, sales and profits, dropped to minus 5 from minus 3.

“It is likely that persistently weak confidence is having a material impact on demand,” Alan Oster, NAB’s chief economist, wrote in a report today.

The ZEW Center for European Economic Research in Mannheim may say its gauge assessing the current economic situation in Germany declined to 8 in November, the lowest since June 2010, according to the median estimate of economists surveyed by Bloomberg News before the data today. That compares with a reading of 10 in October. A separate gauge for economic sentiment may be at minus 10 from minus 11.5 in October, the survey showed.

Losses in the so-called Aussie were limited after Jonathan Kearns, head of economic analysis at the Reserve Bank of Australia, said the nation’s dwelling investment is showing “tentative signs” of picking up. The expected increase would “in part offset the smaller contribution to growth that we expect from resource investment in the coming years,” he said in Sydney today.

Interest-rate swaps data compiled by Bloomberg show traders see a 65 percent chance the Reserve Bank will lower its benchmark to 3 percent next month.

Australia’s government bonds rose, with the benchmark 10- year bond yield falling two basis points to 3.06 percent.

To contact the reporter on this story: Mariko Ishikawa in Tokyo at mishikawa9@bloomberg.net

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


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