Bloomberg News

Aussie Dollar Decreases on Slowing Private-Business Investment

November 29, 2012

The Australian dollar dropped against its U.S. counterpart after business investment slowed from the previous quarter amid manufacturing weakness.

The Aussie fell versus all of its 16 most-traded peers as capital spending gained 2.8 percent in third quarter, down from 3.4 percent in the second quarter, the Bureau of Statistics said in Sydney yesterday. That compares with the median forecast for a 2 percent gain in a Bloomberg News survey of 20 economists. The New Zealand dollar decreased against most of its major counterparts even as equities and commodities rose.

“Deteriorating domestic fundamentals and terms of trade suggest that the Aussie is likely to remain vulnerable,” Dara Blume, a London-based foreign-exchange analyst at Morgan Stanley (MS:US), wrote yesterday in a note to clients. “The Australian dollar appears to be losing its appeal as an investment currency.”

Australia’s currency depreciated 0.4 percent to $1.0435 yesterday in New York, its biggest drop on a closing basis since Nov. 15. It declined 0.4 percent to 85.69 yen.

The New Zealand dollar, nicknamed the kiwi, sank 0.1 percent to 82.27 U.S. cents. It decreased 0.1 percent to 67.56 yen.

The Standard & Poor’s GSCI Index of raw materials increased 1.1 percent and crude-oil futures gained 1.4 percent to $87.68 per barrel in New York. The S&P 500 Index (SPX) rose 0.4 percent.

New Zealand’s dollar has strengthened 4.3 percent this year, the biggest increase among the 10 developed-nation currencies monitored by the Bloomberg Correlation-Weighted Indexes, and the Aussie has gained 0.3 percent. The U.S. dollar has fallen 2.2 percent and the yen has dropped 9 percent to lead decliners.

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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