BLBG:Aussie, N.Z. Dollars Slide to 2-Week Lows on European Rating-Cut Concern Q
The Australian and New Zealand dollars declined to two-week lows as concern European governments face credit-rating cuts damped demand for higher- yielding assets.
The South Pacific nations’ currencies tumbled yesterday after Moody’s Investors Service said it will review the credit ratings of European Union member states after last week’s summit failed to produce decisive steps to end the crisis. Losses in the so-called Aussie and kiwi were limited before a report forecast to show retail sales in the U.S. rose in November.
“Risks are to the downside in the near term and we may look to test parity on the day” for Australia’s currency, said Sean Callow, a Sydney-based senior foreign-exchange strategist at Westpac Banking Corp., the country’s second-largest lender. “We’re seeing pressure in the European debt markets in the wake of the summit.”
The Australian dollar touched $1.0031, the lowest since Nov. 30, before trading at $1.0067 as of 12:58 p.m. in Sydney, 0.1 percent below yesterday’s close. The Aussie was at 78.46 yen from 78.49 yen yesterday, when it dropped 1 percent.
Australia’s government bonds advanced, with the yield on the 10-year note falling as much as 10 basis points or 0.1 percentage point to 3.78 percent, the lowest since at least September 1992 when Bloomberg began compiling data. Three-year bond yields slid as much as 11 basis points to 3.01 percent.
New Zealand’s currency touched 76.10 U.S. cents, the lowest since Nov. 30, before trading little changed from yesterday at 76.29 cents. The kiwi tumbled 1.6 percent against the U.S. dollar yesterday. It fetched 59.46 yen from 59.45 yen.
European Debt
Italian and Spanish bonds led declines in Europe’s higher- yielding sovereign debt yesterday after Moody’s said measures agreed at the leaders’ summit on Dec. 8 and 9 don’t go far enough to stem the crisis.
“There’s a huge amount of supply in coming weeks, so if the European summit didn’t provide a shot of confidence to the market, then you do have to be very concerned about where the buyers would come from,” said Westpac’s Callow. “Sentiment is souring.”
Greece is scheduled to sell 1.25 billion euros ($1.65 billion) of six-month bills today and Spain plans to offer 12- and 18-month debt. Italy will auction 3 billion euros of five- year bonds tomorrow.
U.S. Retail
Sales at U.S. retailers rose 0.6 percent in November, according to the median forecast of economists surveyed by Bloomberg News before the Commerce Department figures today. The Federal Open Market Committee meets today in Washington.
“Retail sales are expected to remain relatively steady,” Emma Lawson, a currency strategist at National Australia Bank Ltd. in Sydney, wrote in a research note today. “Better U.S. economic data may support the higher beta currencies” such as the Australian dollar, she wrote.
Losses in the kiwi were limited after Auckland-based Fonterra Cooperative Group Ltd., the world’s largest dairy exporter, raised its forecast milk payout to farmers for the year through May.
A National Australia Bank Ltd. survey today showed that Australian business confidence was unchanged in November. The confidence index was 2 last month, the same as in October, according to the poll of about 550 companies conducted from Nov. 21-25.
To contact the reporter on this story: Mariko Ishikawa in Tokyo at mishikawa9@bloomberg.net
To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net
