BLBG: Australian Dollar Declines as Growth Slows, Central Bank to Hold Key Rate
The Australian dollar fell toward a three-week low as economists expect the central bank to hold borrowing costs unchanged for a second month on signs the global economic recovery is slowing.
The New Zealand dollar dropped for a second day after U.S. stocks fell July 2 and a report showed the world’s largest economy lost jobs last month. A report tomorrow is forecast to show U.S. service industries expanded at a slower pace. The Reserve Bank of Australia will keep the benchmark interest rate at 4.5 percent tomorrow, according to all 22 economists in a Bloomberg News survey.
“Markets have become more concerned about the global outlook,” said Jonathan Cavenagh, a currency strategist at Westpac Banking Corp. in Sydney. “With that kind of background, it’s hard to see the Aussie and kiwi rallying or recovering.”
The Australian dollar fell to 83.82 U.S. cents as of 9:27 a.m. in Sydney from 84.16 in New York on July 2. It touched 83.16 cents on July 1, the lowest since June 10. The Aussie dropped to 73.50 yen from 73.85 yen. It reached 72.69 yen on July 1, the weakest level since May 25.
The New Zealand dollar declined to 68.57 U.S. cents from 68.84. It fell to 60.13 yen from 60.51 yen.
The Standard & Poor’s 500 Index fell 0.5 percent at the end of last week, declining for a fifth straight day. U.S. nonfarm payrolls dropped last month by 125,000 positions, Labor Department figures showed on July 2 in Washington.
The Institute for Supply Management’s index of non- manufacturing businesses, which make up about 90 percent of the economy, fell to 55 in June from 55.4 in May, according to the median estimate of economists in a Bloomberg News survey ahead of tomorrow’s report.
“We are cautious on the near-term outlook for the Australian dollar given that global risk appetite remains weak,” Gareth Berry, a currency strategist in Singapore at UBS AG, the world’s second-largest foreign-exchange trader, wrote in a note today. “Furthermore, appreciation pressure on the Aussie due to expectations of further rate hikes has also now subsided.”
To contact the reporter on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net
