Aussie Declines Versus Yen on Narrowing Trade Surplus, Italy Debt Concern

The Australian dollar fell for a third day against the yen after the country’s trade surplus narrowed more than economists estimated.

The New Zealand dollar and the Aussie declined against their U.S. counterpart on reduced demand for higher-yielding assets as stocks fell after Italian Prime Minister Silvio Berlusconi failed to muster an absolute majority when passing a budget vote amid calls for his resignation.

“The Aussie dollar has started to take a little bit of a tumble on a smaller-than-expected surplus,” said Sue Trinh, a senior strategist at Royal Bank of Canada in Hong Kong. “Indicators on the domestic front do seem to be showing signs of softening.”

Australia’s dollar dropped 0.8 percent to 80.33 yen at 11:57 a.m. New York time. The Aussie depreciated 0.5 percent to $1.0328. The New Zealand dollar, also known as the kiwi, fell 0.7 percent to 61.79 yen. The currency declined 0.3 percent to 79.45 U.S. cents.

Australia’s exports exceeded imports in September by A$2.56 billion ($2.64 billion), compared with a revised A$2.95 billion surplus in August, the Bureau of Statistics said in a report released in Sydney today. The median estimate in a Bloomberg News survey of 24 economists was for a decrease to A$3 billion from a previously reported A$3.1 billion.

The Standard & Poor’s 500 Index fell 0.2 percent after the Italian vote after gaining as much as 0.8 percent. The MSCI World (MXWO) Index gained 0.1 percent after rising 1.2 percent.

Italian Turmoil

Berlusconi’s lack of a majority threatens the passage of measures pledged to the European Union to reduce the region’s second-biggest debt, which were due to be voted on in a confidence motion next week.

Australian employment data this week is forecast to show the jobless rate rose to 5.3 percent in October from 5.2 percent in the previous month, according to median forecast of 24 economists in a Bloomberg News survey.

The Reserve Bank may lower borrowing costs by 25 basis points, or 0.25 percentage point, in the first quarter of 2012, RBC’s Trinh said. It cut rates to 4.50 percent from 4.75 percent on Nov. 1.

“The market remains more aggressively priced for interest-rate cuts from the Reserve Bank of Australia than we anticipate,” said Trinh. “Normalization of those interest-rate expectations should ultimately support or at least cushion Aussie from deeper losses.”

To contact the reporter on this story: Mariko Ishikawa in Tokyo at mishikawa9@bloomberg.net

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

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