The Australian and New Zealand dollars fell after China said its economy expanded at the slowest pace in almost 10 years, raising concern the global recession may deepen. The Australian currency erased earlier gains versus the greenback and the yen as U.S. stock futures fell after a Chinese government report showed economic growth slowed to 6.1 percent last quarter from 6.8 percent in the prior three months. New Zealand’s dollar extended declines as a report showed manufacturing shrank for an 11th month. “The renewed weakness was very much linked to the China GDP data after pre-release rumors that growth could have been as much as 8 percent,” said Greg Gibbs, director of foreign- exchange strategy in Sydney at Royal Bank of Scotland Group Plc. “A lot of the good news for the Australian dollar has already been priced in.” Australia’s dollar weakened to 72.68 U.S. cents as of 1:17 p.m. in Sydney from 72.88 cents yesterday in New York. It slid 0.4 percent to 72.09 yen. New Zealand’s currency fell to 57.62 U.S. cents from 58.12 cents. It lost 1.1 percent to 57.13 yen. China’s expansion lagged behind its 9 percent growth for all of 2008 as a global recession cut demand for textiles and electronics, prompting thousands of factories to close and leaving more than 20 million migrant laborers without work. The economy was expected to grow 6.2 percent, according to the median estimate of 13 economists surveyed by Bloomberg News. ‘Tail End’ “We may be at the tail end of an optimistic wave, yet the U.S. economy is still in recession and the economic data is still painting a very ugly picture,” said Danica Hampton, currency strategist at Bank of New Zealand Ltd., from Auckland. “A lot of the optimism we’ve been seeing has been driven by a perception the global economy is on the road to recovery.” The Australian currency may decline below 72 U.S. cents today and would find support toward 71.80 cents, Hampton said. Support refers to levels where buy orders may be clustered. New Zealand’s dollar may weaken toward 57.40 U.S. cents and is unlikely to advance today any higher than 58.50 cents, she said. “There are downside risks because of the country’s economic situation, there’s not enough monetary easing priced in,” she said. “We expect a 50 basis-point cut at the April 30 Reserve Bank meeting and a signal for more cuts.” New Zealand Output The performance of manufacturing index was 40.7 compared with 38.9 in February, Bank of New Zealand Ltd. and Business New Zealand said in Wellington today. A reading below 50 shows manufacturing is contracting. The Australian dollar rose for a sixth day against the New Zealand currency, advancing 0.7 percent to NZ$1.2608. “I’m surprised the cross is not stronger at NZ$1.28 or NZ$1.30,” ICAP’s Carr said. “New Zealand has a bit of dilemma with its massive current-account and fiscal deficits. Australia is growing in comparison and has far sounder fundamentals.” New Zealand’s recession is likely to extend for six quarters, the worst in more than three decades, as a contraction in the world’s biggest economies curbs exports, the Reserve Bank said last month. Slowing manufacturing adds to signs the jobless rate may surge to a 10-year high as firms cut costs. Australian government bonds rose for a second day, pushing the 10-year yield down 10 basis points, or 0.1 percentage point, to 4.48 percent. The price of the 5.25 percent security due March 2019 gained 0.809, or A$8.09 per A$1,000 face value, to 106.098, Bloomberg data show. New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, fell to 3.66 percent from 3.69 percent yesterday.

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