BLBG:Australian Dollar Falls on China Manufacturing Index; Kiwi Drops from High
The Australian dollar fell, ending a two-day gain, after a private report signaled manufacturing slowed in China, the smaller nation’s biggest trading partner.
The so-called Aussie slid against all of its major counterparts as China’s report added to speculation Australia’s central bank will cut interest rates as the economy slows. New Zealand’s currency fell from a record high versus the greenback.
“I’ll be bearish both on the Aussie and kiwi, especially the Aussie,” said Lee Wai Tuck, a currency strategist at Forecast Pte in Singapore. There are “concerns that a slowing China may not have so much demand for resources and minerals from Australia.”
Australia’s dollar declined to $1.0713 as of 2:03 p.m. in Sydney from $1.0750 in New York yesterday. New Zealand’s currency traded at 85.68 U.S. cents from 85.62 cents after reaching an all-time high of 85.88 cents.
China’s manufacturing gauge fell to 48.9 in July, below the 50 level that signals a contraction, from 50.1 last month, according to HSBC Holdings Plc and Markit Economics. The final reading for July is due Aug. 1.
The Australian dollar was within 0.3 percent of an 11-month low against the kiwi on speculation the bigger nation’s central bank will cut interest rates as inflation cools.
National Australia Bank Ltd. today said its index of business sentiment fell in the second quarter. That followed a private report last week that showed consumer confidence slid by the most since Lehman Brothers Holdings Inc. collapsed in 2008.
Australia’s central bank left its benchmark rate unchanged at 4.75 percent on July 5.
“A recent run of weak Australian data has led to growing expectations of a policy rate cut,” Mitul Kotecha, head of global currency strategy at Credit Agricole CIB, in Hong Kong, wrote in a report today.
The Aussie slid to NZ$1.2513 from NZ$1.2553 yesterday after falling to NZ$1.2484 on July 19, the lowest since August 2010.
To contact the reporter on this story: Masaki Kondo in Singapore at mkondo3@bloomberg.net.
To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net.
