BLBG:Aussie, New Zealand Dollars Drop for a Third Day on European Debt Concern
The Australian and New Zealand dollars declined for a third day on concern Europe’s debt crisis is deepening, sapping demand for higher-yielding assets.
The so-called Aussie fell against 15 of its 16 major counterparts before European countries, including Germany, Greece, Spain and Italy, sell bonds next week. New Zealand’s dollar was set for a weekly advance against the majority of its most-traded peers before a U.S. report that economists say will show hiring increased last month in the world’s largest economy.
“A worsening of Europe’s debt problem accelerates risk aversion and therefore is a selling catalyst” for the Australian and New Zealand dollars, said Takuya Kawabata, a researcher in Tokyo at Gaitame.com Research Institute Ltd., a unit of Japan’s largest currency margin company.
Australia’s dollar fell 0.6 percent to $1.0208 as of 4:08 p.m. in Sydney from the close in New York yesterday. New Zealand’s currency dropped 0.4 percent to 77.79 U.S. cents.
The MSCI Asia Pacific Index (MXAP) of shares retreated 1.3 percent, damping the allure of currencies linked to global growth.
Australian 10-year government notes declined, with yields rising one basis point, or 0.01 percentage point, to 3.80 percent. The two-year interest-rate swap in New Zealand was unchanged at 2.79 percent.
Germany will sell six-month bills on Jan. 9 and five-year notes on Jan. 11, while Greece will auction 1.25 billion euros ($1.6 billion) of bills on Jan. 10. Spain will offer bonds on Jan. 12 and Italy will sell debt that day and on Jan. 13.
French Auction
France’s offering of 10-year bonds yesterday drew the lowest demand since October 2009, as measured by the number of bids received (FRAB10BC) for each unit of debt sold. France’s credit outlook was lowered by Fitch Ratings on Dec. 16.
Traders speculate the Reserve Bank of Australia will cut the benchmark rate to 3.5 percent by May from 4.25 percent, futures prices show. Barclays Capital says the Aussie may fall to 1.8 Brazilian reais in the next three months from 1.89 today.
The currencies of both Australia and Brazil “have been driven by several common factors such as commodity prices, global risk appetite and high carry,” Barclays strategists, including Guillermo Felices, wrote in a report yesterday. “We see risks of a more aggressive easing cycle from the Reserve Bank of Australia.”
The New Zealand dollar has risen 0.1 percent versus the U.S. currency in the past five days, set for a third weekly gain. The Australian dollar is little changed this week.
U.S. Economy
Payrolls in the U.S. climbed by 155,000 workers in December after rising 120,000 the previous month, according to the median estimate of economists in a Bloomberg News survey before Labor Department data today.
“The U.S. economy is recovering steadily,” said Kengo Suzuki, a foreign-exchange strategist in Tokyo at Mizuho Securities Co., a unit of Japan’s third-biggest listed bank by market value. “Any spreading of optimism about the global economy will result in buying of the Australian and New Zealand currencies.”
The Australian dollar reached a record 80.34 euro cents yesterday. Morgan Stanley recommends selling Europe’s common currency and buying the Aussie.
Rather than outflows from the euro seeking havens, “alternative investment destinations are likely to appear attractive, at least in the near term while investor sentiment remains buoyed,” Ian Stannard, head of European foreign- exchange strategy at Morgan Stanley, wrote in a report yesterday.
To contact the reporter on this story: Masaki Kondo in Singapore at mkondo3@bloomberg.net
To contact the editor responsible for this story: Garfield Reynolds at greynolds1@bloomberg.net
