BLBG:Australian, New Zealand Dollars Decline on Concern Global Growth Will Slow
The Australian and New Zealand dollars fell against most of their 16 major peers on concern Europe’s sovereign-debt crisis will slow global economic growth, sapping demand for riskier assets.
The so-called kiwi declined to two-week lows against the greenback and the yen after commodity prices dropped and reports indicated manufacturing is contracting in New Zealand and China. The South Pacific nations’ currencies weakened for a fourth day before Spain sells debt following a report showing that the country’s lenders borrowed more from the European Central Bank. Australia’s 10-year yield fell to a record low.
“The message coming out of Europe is that there will be a dramatic slowdown in European activity and that’s going to affect the big exporters in Asia, particularly China,” said Derek Mumford, a Sydney-based director at Rochford Capital, a currency-risk management firm. “That’s dragging down” the Australian and New Zealand dollars, he said.
The Australian dollar touched 98.81 U.S. cents, the lowest since Nov. 29 before trading at 98.94 as of 3:53 p.m. in Sydney. The so-called Aussie dropped as low as 77.15 yen, the weakest since Nov. 29, before trading 0.2 percent below yesterday’s close at 77.25.
New Zealand’s currency fell 0.4 percent to 74.75 U.S. cents after touching 74.72, the lowest since Nov. 28. It dropped to as low as 58.33 yen, also the least since Nov. 28, before trading at 58.36, 0.4 percent lower than yesterday’s close.
Australia’s government bonds advanced, pushing the yield on the 10-year note down 11 basis points, or 0.11 percentage point, to 3.74 percent. It earlier dropped to 3.72 percent, the lowest since at least September 1992 when Bloomberg began compiling data.
Manufacturing Data
New Zealand’s manufacturing industry contracted for a second month in November, according to the Performance of Manufacturing Index. (CRY) The measure fell to 45.7 from a revised 46.6 in October, Bank of New Zealand Ltd. and Business New Zealand, a Wellington-based employer group, said on the group’s website. A reading less than 50 indicates that manufacturing is decreasing.
China’s manufacturing may contract for a second month in December as Europe’s debt crisis weighs on exports and home sales slide, preliminary results from a survey indicate. The reading of 49 for a purchasing managers’ index (MXWO) reported by HSBC Holdings Plc and Markit Economics today compares with a final number of 47.7 for November. The Asian nation is Australia’s largest trading partner and New Zealand’s second-biggest export market.
Lower Commodities Prices
“Commodity prices in general have really come off very steeply in the last few months and that’s obviously not good for the Aussie dollar,” said Rochford’s Mumford. He expects the currency to fall to 95 U.S. cents by year-end.
The MSCI Asia Pacific Index of shares fell 1.5 percent. The Thomson Reuters/Jefferies CRB Index of raw materials tumbled 3.4 percent yesterday, while the MSCI World Index of stocks dropped 1.8 percent.
Spain is scheduled to sell debt maturing in 2016, 2020 and 2021 today. The nation’s banks borrowed an average 98 billion euros ($127 billion) from the ECB last month, the most since September 2010, according to data published by the Bank of Spain.
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
