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New Zealand Dollar Weakens as Gains in House Prices Slow; Aussie Declines
New Zealand’s dollar fell against most of its major counterparts after an industry report showed house prices rose at the slowest pace since December, damping prospects the central bank will increase interest rates.
The currency, nicknamed the kiwi, approached a two-week low versus the yen as swap traders cut to 63 percent the chance the Reserve Bank of New Zealand will raise borrowing costs next month, from 70 percent odds July 30. Australia’s currency weakened against the dollar as the Federal Reserve prepared to meet tomorrow.
“The recent set of data threw cold water on rates views in New Zealand,” said Takuya Kawabata, a researcher in Tokyo at Gaitame.com Research Institute Ltd., a unit of Japan’s largest online currency trader. “Receding expectations for further rate hikes are weighing heavily on the currency.
New Zealand’s dollar fell 0.6 percent to 72.90 U.S. cents at 1:01 p.m. in New York, from 73.35 cents on Aug. 6. The currency fell 0.2 percent to 62.59 yen, from 62.71 yen at the end of last week, when it slid to 62.02, the weakest since July 22. The Australian dollar slipped 0.3 percent to 91.60 U.S. cents, from 91.83 cents, and rose 0.2 percent to 78.64 yen.
The kiwi weakened versus 15 of the 16 most-traded currencies after Quotable Value New Zealand Ltd. said the nation’s house prices advanced 4.1 percent in July from a year earlier, after gaining 5.2 percent in June. Nineteen percent of the 2,280 people polled last month forecast house prices will drop over the next year, up from 16 percent in May, a survey from ASB Bank Ltd. showed. New Zealand’s dollar gained against the Swiss franc.
Speculation on Fed
The central bank raised its key rate to 3 percent last month while signaling that deteriorating growth will slow the pace of future increases.
Demand for Australia’s dollar was tempered on speculation U.S. policy makers meeting tomorrow will disappoint market expectations for a second round of stimulus measures.
Fed policy makers have kept the benchmark interest rate at a record low range of zero to 0.25 percent since December 2008 to spur economic growth.
To contact the reporters on this story: Yasuhiko Seki in Tokyo at yseki5@bloomberg.net; Catarina Saraiva in New York at asaraiva5@bloomberg.net
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