Bloomberg News

Aussie Declines Versus U.S. Dollar on Interest-Rate Cut Wagers

February 06, 2013

The Australian dollar fell to its lowest in 12 weeks versus its U.S. counterpart before the release of data forecast to show rising unemployment, boosting prospects the Reserve Bank will cut interest rates next month.

The Aussie declined against the majority of its major peers after the central bank left the cash-rate at a half-century low Feb. 4 and said the inflation outlook “would afford scope to ease policy further.” New Zealand’s dollar fell versus the dollar and yen before the government issues employment data.

“The Aussie’s move has been driven by rising expectations that the Reserve Bank of Australia will deliver on more rate cuts down the line,” Shahab Jalinoos, a senior currency strategist at UBS AG in Stamford, Connecticut, said in a telephone interview. “The market is looking ahead to the unemployment data. If we get a weak number, it might be a big catalyst for a rate cut.”

The Aussie fell 0.6 percent to $1.0324 yesterday in New York, after falling below the 200-day moving average to $1.0297, the lowest since Nov. 16. It declined 0.8 to 96.55 yen.

The New Zealand dollar, nicknamed the kiwi, weakened 0.3 percent to 84.27 cents per U.S. dollar. The kiwi fell 0.3 percent to 78.79 yen.

Standard & Poor’s GSCI Index of 24 raw materials was little changed.

Jobless Rate

The Aussie declined as Australia’s unemployment rate in January was forecast to increase to 5.5 percent from 5.4 percent, according to median forecast of 25 economists polled by Bloomberg News.

Retail sales in Australia fell 0.2 percent in December from the previous month, capping their longest stretch of declines in 13 years, the statistics bureau said in Sydney yesterday. The median estimate of economists surveyed by Bloomberg News was for 0.3 percent growth.

RBA Governor Glenn Stevens and his board left the overnight cash rate target at 3 percent Tuesday, in line with economists forecasts. Interest-rate swaps data compiled by Bloomberg show traders see a 55 percent chance the RBA will lower the benchmark on March 5.

New Zealand’s unemployment rate was forecast to decline by 0.2 percentage point to 7.1 percent, according to a median forecast by eight economists polled by Bloomberg.

The Aussie fell 2.1 percent during the past month among the 10 developed-nation currencies monitored by the Bloomberg Correlation-Weighted Indexes. The kiwi gained 1.1 percent. The the greenback dropped 0.4 percent.

To contact the reporter on this story: Taylor Tepper in New York at ttepper2@bloomberg.net

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


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