Aussie Dollar Drops on Speculation RBA to Lower Rates
The Australian dollar weakened against most of its major counterparts before a central bank meeting where policy makers are forecast to reduce interest rates for the first time this year.
The Aussie and New Zealand’s dollar fell versus their U.S. counterpart and the yen after Spain entered recession for the second time since 2009, fueling concern Europe’s debt crisis is worsening, and U.S. economic data were weaker than forecast. The Reserve Bank of Australia will cut its benchmark rate to 4 percent, from 4.25 percent, according to a Bloomberg survey.
“It sounds like we could see a 25 basis-point rate cut,” said Joe Manimbo, a market analyst in Washington at Western Union Business Solutions, a unit of Western Union Co. “If the tone of the statement comes across more dovish, that would keep on the table the chance of more easing down the road, so that would pressure the Aussie dollar.”
Australia’s dollar lost 0.4 percent to $1.0429 yesterday in New York in its first drop in four days. It weakened 1 percent to 83.25 yen. New Zealand’s currency, nicknamed the kiwi, fell 0.5 percent to 81.85 U.S. cents in its first decline in four days and dropped 1 percent to 65.32 yen.
The Aussie rose 0.8 percent versus the dollar this month, while its New Zealand counterpart was little changed.
Spain’s gross domestic product fell 0.3 percent in the first quarter, the same as in the previous three months, the Madrid-based National Statistics Institute said. From a year ago, GDP slid 0.4 percent, the institute said.
The Institute for Supply Management-Chicago Inc. said its business barometer decreased to 56.2 in April from 62.2 a month earlier. It was the least since November 2009. Economists in a Bloomberg survey forecast a decline to 60. Readings greater than 50 signal growth.
The MSCI World Index (MXWO) of equities fell 0.4 percent yesterday as investor appetite for riskier assets ebbed.
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