Aussie, N.Z. Dollars Drop as Resources Outlook Weakens


Australia’s dollar touched the lowest level in a month after commodities slid amid concern global economic growth will weaken.

The so-called Aussie declined for a fifth day against the yen after a private report showed the South Pacific nation’s new home sales dropped for the first time in four months. Data this week may show Chinese manufacturing stagnated. New Zealand’s dollar weakened after Asian stocks retreated and dairy exporter Fonterra Cooperative Group Ltd. cut its forecast for payments to farmers.

Australia’s new home sales report “doesn’t help the Aussie as it adds to the negative short-term sentiment,” said Hans Kunnen, chief economist at St. George Bank Ltd. in Sydney. The downward trend on the currency “will continue until China does something or risk appetite’s changed.”

The Australian dollar touched $1.0345, the weakest since July 26, before trading at $1.0365 at 4:08 p.m. in Sydney, compared with $1.0369 yesterday in New York. It slid 0.3 percent to 81.29 yen. New Zealand’s dollar, known as the kiwi, declined 0.1 percent to 80.76 U.S. cents and 0.4 percent to 63.45 yen.

The MSCI Asia Pacific Index (MXAP) of stocks lost 0.5 percent. The Thomson Reuters/Jefferies CRB Index (CRY) of raw materials fell 0.1 percent yesterday.

Global Economy

Australian sales of newly built homes decreased 5.6 percent to 5,682 last month from June, when they gained 2.8 percent, the Canberra-based Housing Industry Association said today, citing a survey of the nation’s largest builders.

The nation’s government bonds were little changed, with 10- year yields at 3.20 percent, after touching 3.17 percent, the lowest since Aug. 3.

A report yesterday showed profits for industrial companies in China fell 5.4 percent in July from a year earlier. China is Australia’s biggest trading partner and New Zealand’s second- largest export market.

A Purchasing Managers’ Index of Chinese manufacturing probably fell to 50 in August from 50.1 the previous month, according to the median estimate of economists surveyed by Bloomberg before the data on Sept. 1. Fifty marks the dividing line between expansion and contraction.

“The recent softness in the Aussie is generated by the softer resources outlook that we’re hearing and the negative news that we’ve had already from China,” said Emma Lawson, a Sydney-based currency strategist at National Australia Bank Ltd. (NAB) “Now the market is waiting for a follow-up stimulus response from various governments.”

Fonterra Forecast

New Zealand’s dollar fell against most of its 16 major counterparts after Fonterra, the world’s largest dairy exporter, cut its forecast payout to farmer suppliers for the current production season. The company will pay its 11,000 farmer shareholders NZ$5.25 ($4.24) a kilogram of milk solids in the year ending May 31, 2013, the Auckland-based company said in a statement today.

Losses in the Australian and New Zealand dollars were limited before the Federal Reserve’s annual symposium in Jackson Hole, Wyoming, this week. Fed Chairman Ben S. Bernanke and European Central Bank President Mario Draghi will speak at the event.

“The case for further monetary relaxation in the U.S. is pretty strong,” Russell Jones, the Sydney-based global head of fixed-income strategy at Westpac Banking Corp. (WBC), said in a Bloomberg Television interview. “We might get an element of disappointment this weekend, but I still think ultimately you’ll see the Fed move on monetary policy.”


Source: Bloomberg

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