New Zealand Dollar Declines as Retail Sales Slump; Aussie Erases Advance

New Zealand’s currency fell against most of its major counterparts after retail sales slid in the fourth quarter, adding to concern a slowing recovery will discourage the central bank from raising interest rates.

The Australian dollar pared gains against the greenback on speculation the Aussie’s rally may be hard to sustain. The currency rose earlier as approval of home loans in Australia climbed in December more than twice the amount economists forecast.

“There’s excessive long positioning in the Aussie and weak economic fundamentals in New Zealand,” said Imre Speizer, a market strategist in Wellington, New Zealand, at Westpac Banking Corp., Australia’s second-largest lender. “We have a weakening bias for both Aussie and kiwi and have been expecting the currencies to fall.”

New Zealand’s dollar fell 0.5 percent to 75.72 U.S. cents at 12:44 p.m. in New York, from 76.06 on Feb. 11. Australia’s currency was little changed at $1.0034, compared with $1.0021, after rising 0.5 percent to $1.0075.

The kiwi fell for a fourth consecutive day against the greenback after Statistics New Zealand said retail sales, adjusted for inflation, fell 0.4 percent in the fourth quarter, matching the decline in previous quarter.

Swaps traders are betting the Reserve Bank of New Zealand will raise borrowing costs by 52 basis points over the next 12 months, down from 55 basis points last week, according to a Credit Suisse Group AG index.

Aussie Bets

Futures traders increased bets the Australian currency will gain versus the U.S. dollar to the highest level in almost 10 months, figures from the Washington-based Commodity Futures Trading Commission show.

The difference in the number of wagers by hedge funds and other large speculators on an advance in the Australian dollar compared with those on a drop -- so-called net longs -- was 71,979 on Feb. 8, the highest level since April 20.

The number of loans granted to build or buy houses and apartments in Australia advanced 2.1 percent in December, the statistics bureau said today. That compared with the median estimate for approvals to rise 1 percent.

To contact the reporter on this story: Candice Zachariahs in Sydney at czachariahs2@bloomberg.net

To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net