BLBG:Aussie Dollar Holds Losses After Data Shows RBA Selling Currency
Australia’s dollar held declines against most of its major peers after the nation’s Reserve Bank said it increased sales of the currency last month to a category of buyers that includes foreign central banks.
Demand for the so-called Aussie was limited after an Israeli air strike on the Gaza strip and signs of a global slowdown reduced demand for riskier assets. Australian bonds rose, sending the benchmark 10-year yield to the lowest level in almost one month before U.S. President Barack Obama meets with congressional leaders to discuss the nation’s fiscal cliff of tax increases and budget cuts.
“There will likely be more chatter that the RBA is perhaps conducting off-market, central bank-to-central bank transactions,” said Emma Lawson, a Sydney-based foreign- exchange strategist at National Australia Bank Ltd. “The Aussie is considered to have been strong due to these market transactions for investors buying our government debt. If it’s being conducted off market, then perhaps that takes some pressure off the upside for the currency.”
Australia’s dollar traded at $1.0386 as of 3 p.m. in Sydney from $1.0376 yesterday, when it dropped 0.6 percent. The Aussie added 0.1 percent to 83.38 yen. New Zealand’s currency added 0.3 percent to 81.25 U.S. cents from yesterday, when it touched 80.88, the lowest since Sept. 11. The so-called kiwi fetched 65.29 yen from 65.02.
The RBA sold A$483 million ($500 million) more Australian dollars than it bought in October through the other outright transactions category, the most since June 2009, according to data released today. It sold a net A$275 million in the spot foreign exchange market.
Risk Appetite
Demand for higher-yielding assets waned on increasing geopolitical risk and signs of a global economic slowdown. Israeli jets struck Gaza yesterday, killing the leader of Hamas’s military wing.
Gross domestic product in the 17-member euro area probably fell for a second-straight quarter in the three months ended in September, according to the median economist estimate compiled by Bloomberg News before the data today. Obama meets with congressional leaders including House Speaker John Boehner tomorrow to discuss the U.S. budget.
“The list of potential negatives out there is growing,” said Robert Rennie currency strategist at Westpac Banking Corp. (WBC) in Sydney. “The difference between Obama and Boehner is still very large on the fiscal cliff, we have increasing tensions now in Gaza and disappointing data out of Europe. It argues for lower levels for the Aussie and kiwi.”
Share Decline
The MSCI Asia Pacific Index of shares slid 0.1 percent today, poised for a sixth-straight drop. MSCI’s World Index sank 1.2 percent yesterday.
Australian government bonds rose, with the 10-year yield declining two basis points, 0.02 percentage point, to 3.03 percent, after touching 3.02 percent, the lowest since Oct. 16.
New Zealand’s Performance of Manufacturing Index was at 50.5 in October, near the 50 level that divides expansion from a contraction and compared to a revised 48.5 in September, a Wellington-based employer group, said on its website today.
Australia & New Zealand Banking Group Ltd. (ANZ) said the number of job advertisements in newspapers and on the Internet decreased 0.8 percent last month.
The Australian dollar has strengthened 2.7 percent in the past month, the best performer tracked by Bloomberg Correlation- Weighted Currency indexes. New Zealand’s dollar gained 0.4 percent in the same period.
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
