Australia’s dollar slumped, taking its run of daily declines against the greenback to the longest in a decade, as concern the global economy is slowing sapped demand for higher-yielding assets. The so-called Aussie fell to the weakest against the yen since March 21 after Standard & Poor’s cut the U.S. long-term credit rating from the highest level on Aug. 5 and Asian stocks tumbled. New Zealand’s currency dropped for the fifth time in six days versus the dollar after prices slumped for commodities that make up a majority of the South Pacific nation’s exports. “People are looking at the global growth scenario, which is not going to be pretty under any path that the U.S. follows after the downgrade,” said Alex Sinton, an Auckland-based senior dealer at ANZ National Bank Ltd. “It is a risk-off day. It’s probably going to have the Aussie dollar under pressure.” Australia’s dollar weakened for an eighth day to $1.0347 as of 4:28 p.m. in Sydney from $1.0442 in New York on Aug. 5 after dropping to as low as $1.0301, the least since April 5. It fell to 80.52 yen from 81.87 yen. The Aussie declined for eight days to Sept. 21, 2001, after the Sept. 11 terror attacks on the U.S. New Zealand’s dollar slid 1.7 percent to 82.89 U.S. cents and declined to as low as 82.55 cents, the weakest since July 13. The so-called kiwi dropped to 64.49 yen from 66.10 yen. The MSCI Asia Pacific index of regional shares fell 2.9 percent, declining for a fifth day. Australia’s S&P/ASX 200 Index dropped 2.9 percent to its lowest level since July 2009. Commodities Slump Crude oil dropped as much as 4.3 percent in afterhours trading on the New York Mercantile Exchange and copper on the London Metal Exchange lost as much as 1 percent. The Thomson Reuters/Jefferies CRB Index of raw materials fell 4.5 percent last week, its biggest decline since the five days ended May 6. The Australian dollar is likely to extend last week’s biggest drop in more than a year and may slide to $1, according to UBS AG. Investors may benefit by selling the Aussie at $1.0420 and should exit the trade if the currency climbs to $1.0510, Gareth Berry, a strategist at UBS in Singapore, wrote in a note to clients. “It seems like the market is pricing in some kind of major, almost disaster that would prompt the Reserve Bank of Australia to cut many times over the next 12 months,” Berry said in a phone interview today. “If the market’s starting to think that in the rates space, the foreign-exchange markets are going to be impacted by that as well over the coming days and weeks.” Cash-Rate Futures December interbank cash-rate futures yields were at 3.57 percent, indicating traders see a 100 percent chance of at least a 75-basis-point rate cut in December, according to Bloomberg calculations. The Aussie may rebound from its losses last week as demand for commodities aids the nation’s economy and its U.S. counterpart weakens, Commonwealth Bank of Australia said. The Aussie dollar may rise to $1.08 by September, Sydney-based currency strategist Joseph Capurso wrote in a note to clients today. The New Zealand dollar will appreciate to 85 cents in three months, 87 cents in six months and 90 cents in a year, Philip Borkin, an economist with Goldman Sachs & Partners New Zealand Ltd. in Auckland, wrote in an Aug. 5 research note. The Reserve Bank probably will raise the rates by 50 basis points, or 0.5 percentage point, to 3 percent at next month’s meeting, he wrote. New Zealand’s economy is in a better state than the U.S. or Europe, Prime Minister John Key said in Wellington today. Yields on Australia’s three-year debt rose to 3.84 percent today, after a 69-basis-point drop to 3.67 percent last week, the biggest slide since February 1993. Ten-year yields climbed 14 basis points, or 0.14 percentage point, to 4.62 percent. New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, declined 11 basis points to 3.25 percent after earlier dropping to as low as 3.22 percent, the least since March 18. To contact the reporter on this story: Kristine Aquino in Singapore at kaquino1@bloomberg.net To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net

Source