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Australian, New Zealand Dollars Weaken on Concern China's Growth Will Slow
The Australian and New Zealand dollars fell this week versus the yen before a report economists said will show manufacturing growth slowed for a third month in China, adding to signs global growth is losing momentum.
The Aussie also weakened after a central bank report showed bank lending grew in June at the weakest pace in seven months. New Zealand’s dollar is set for its biggest weekly loss since July 2 against the greenback as home-building approvals declined and its central bank said yesterday deteriorating growth will slow the pace of interest-rate increases.
“The Chinese PMI data is out Sunday with rumors of a sharply weaker number,” said Sue Trinh, a senior currency strategist in Hong Kong at Royal Bank of Canada, the nation’s biggest lender. “If that is realized, I would expect both Aussie and kiwi to open on Monday a lot weaker.”
New Zealand’s dollar declined 0.3 percent to 62.65 yen at 12:42 p.m. in New York from yesterday, set for a 1.5 percent weekly loss. It advanced 0.1 percent to 72.48 U.S. cents.
Australia’s currency fell 0.1 percent to 78.08 yen. It gained 0.4 percent to 90.38 U.S. cents from 90.05 cents, after rising to 90.69 cents on July 27, the highest since May 10. The currency has gained 7.5 percent against the greenback this month, the biggest advance since May 2009.
China’s Purchasing Managers’ Index for July will slip below 50 for the first time since February 2009, Glenn Maguire, chief Asia economist for Societe Generale SA in Hong Kong, said July 28. The median forecast in a Bloomberg News survey is for a reading of 51.4 when the figure is released on Aug. 1.
N.Z. Growth
China is Australia’s largest trading partner and New Zealand’s second-biggest export market. The MSCI Asia Pacific index declined 0.5 percent, ending a five-day gain.
New Zealand’s dollar slid for a third day against the yen as the statistics bureau said home-building permits dropped 6.6 percent in the second quarter after falling 0.1 percent in the previous three months.
“The recent disappointing consent numbers are just one piece in a list of evidence that suggests the Reserve Bank should be removing stimulus only gradually,” said Philip Borkin, economist at Goldman Sachs JBWere Ltd. in Auckland.
Central bank Governor Alan Bollard said yesterday that the “pace and extent” of further increases to the benchmark rate will likely be “more moderate” than a June projection, after boosting the official cash rate to 3 percent.
To contact the reporters on this story: Candice Zachariahs in Sydney at czachariahs2@bloomberg.net; Catarina Saraiva in New York at asaraiva5@bloomberg.net
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