By Theresa Barraclough and Garfield Reynolds April 19 (Bloomberg) -- The Australian dollar fell to the lowest level in almost two weeks as prospects a U.S. probe into Goldman Sachs Group Inc. will prompt investigations in Europe damped investor appetite for higher-yielding assets. The so-called Aussie dropped as China, Australia’s biggest trading partner, took steps to rein in credit and before an International Monetary Fund mission visits Athens to discuss aid for Greece. New Zealand’s currency gained versus the Australian dollar before a report tomorrow forecast to show consumer prices rose in the smaller country, backing the case for policy makers to consider raising interest rates from a record low. “Goldman’s status as a leader among U.S. investment banks makes the probe more significant than scrutiny of a smaller firm, and with the prospects of further probes, that may be damping risk appetite,” said Imre Speizer, a market strategist in Wellington at Westpac Banking Corp. “The IMF is visiting Greece today and the market will be looking to see whether Greece is going to formally seek funding.” Australia’s currency dropped to 91.97 U.S. cents as of 2:38 p.m. in Sydney from 92.43 cents in New York on April 16. The currency earlier fell to 91.82 U.S. cents, the lowest since April 6. The Aussie weakened 0.6 percent to 84.64 yen. New Zealand’s dollar traded at 70.88 U.S. cents from 70.85 cents and bought 65.22 yen from 65.31 yen. The currency was at NZ$1.2974 per Australian dollar, from NZ$1.3049 on April 16. Goldman Probe U.K. Prime Minister Gordon Brown yesterday called for the Financial Services Authority to start an investigation into Goldman Sachs, saying he was “shocked” at the “moral bankruptcy” indicated in a suit filed against the bank last week by the U.S. Securities and Exchange Commission. Germany’s financial regulator, Bafin, asked the SEC for details on the suit, a spokesman for Chancellor Angela Merkel said. in cities with excessive property price gains The Australian dollar declined as China told banks to stop loans for third-home purchases in cities with excessive property price gains. The nation’s latest move to cool its property market comes after prices gained a record 11.7 percent in March. The world’s third-biggest economy this year re-imposed a sales tax on homes and told banks to set aside more deposits as reserves. New Zealand’s dollar strengthened against all its major counterparts. The nation’s consumer prices climbed 0.6 percent in the first quarter after a 0.2 percent decline in the last quarter of 2009, according to the median estimate of economists in a Bloomberg News survey before Statistics New Zealand reports the data tomorrow. Aussie Support Australia’s dollar may find support as it approaches 92 U.S. cents and is unlikely to strengthen beyond 92.70, Westpac’s Speizer said. The so-called kiwi probably will trade between 70.5 U.S. cents and 71.5 cents, he said. The Australian dollar will probably climb to the highest since July 2008 as an improved outlook for corporate earnings and the global economic recovery boost demand for riskier assets, Credit Agricole CIB said. The first-quarter earnings season began in the U.S. last week, with analysts predicting combined profit increased 35 percent from a year earlier for Standard & Poor’s 500 companies, according to estimates compiled by Bloomberg. The projection is up from a forecast of 30 percent last week. “The downside for the Aussie will be fairly limited,” said Mitul Kotecha, Hong Kong-based head of global currency at Credit Agricole. “Earnings have been coming in much better than expected.” The Australian dollar may reach 95 cents by the end of June, Kotecha said. That would be the strongest since July 2008. ‘Tilted Down’ Talks on Greece involving the European Commission, the IMF and the European Central Bank have been delayed to April 21 from April 19 because of the volcanic ash cloud disrupting European air travel. The premium of Greek 10-year bonds over similar- maturity German bunds widened 30 basis points to 430 basis points on April 16. Greece needs to raise 11.6 billion euros ($15.6 billion) by the end of May. “The near-term risks for the Australian dollar are tilted down,” said John Kyriakopoulos, head of currency strategy in Sydney at National Australia Bank Ltd. “Also weighing on investor risk-appetite are concerns about the Greek debt crisis.” Benchmark interest rates are 4.25 percent in Australia and 2.5 percent in New Zealand, compared with 0.1 percent in Japan and as low as zero in the U.S., attracting investors to the South Pacific nations’ higher-yielding assets. The risk in such trades is that currency market moves will erase profits. New Zealand’s two-year swap rate, a fixed payment made to receive floating rates which is sensitive to rate expectations, was little changed at 4.22 percent. Australian government bonds rose for a second day. The yield on the benchmark 10-year note fell six basis points to 5.76 percent, according to data compiled by Bloomberg. The 4.5 percent security due April 2020 advanced 0.44, or A$4.40 per A$1,000 face amount, to 90.57. To contact the reporter on this story: Theresa Barraclough in Tokyo at tbarraclough@bloomberg.netGarfield Reynolds in Sydney at greynolds1@bloomberg.net

Source