The Australian dollar dropped against most of its 16 major peers as Asian stocks extended a global rout, sapping demand for higher-yielding currencies.
The so-called Aussie slid for a second day on speculation the Reserve Bank of Australia will cut interest rates tomorrow and after data showed traders increased bearish bets on the currency to a record. The New Zealand dollar erased a two-day gain after U.S. figures last week showed employers added the fewest workers in a year and before Spain auctions bonds this week amid concern Europe’s debt crisis is deepening.
“There is some potential for some further weakness in both of them on this whole softening in the U.S. economic environment and the concerns in Europe,” said Thomas Averill, managing director in Sydney at Rochford Capital, a currency and interest-rate risk-management company, referring to the South Pacific nations’ currencies. “We are going for a risk-off period of trading.”
The Australian dollar dropped 0.4 percent to 96.64 U.S. cents as of 4:20 p.m. in Sydney. It touched 95.82 last week, the lowest since Oct. 5. The New Zealand currency slid 0.2 percent to 75.29 U.S. cents, after falling to 74.57 on June 1, matching the weakest since Nov. 28.
The MSCI Asia Pacific Index (MXAP) of stocks retreated 2.2 percent. The Standard & Poor’s 500 Index of U.S. shares slid 2.5 percent on June 1, while the Stoxx Europe 600 Index fell 1.9 percent.
U.S. payrolls increased by 69,000 last month, less than the most pessimistic forecast in a Bloomberg News survey of economists, Labor Department figures showed on June 1. The median projection was a 150,000 gain.
The RBA (RBATCTR) will cut the benchmark rate tomorrow to 3.5 percent from 3.75 percent, according to a separate poll of economists. Credit Suisse Group AG forecasts the RBA will reduce the rate by 50 basis points, citing “disappointing” U.S. economic data.
Australia’s bonds climbed, with rates on all maturities of one year or longer falling to records. Three-year yields declined as much as 14.4 basis points to 1.889 percent. The one-year rate touched 2.338 percent.
“The RBA has shown itself to be proactive when the circumstances require, and I think a proactive central bank will cut rates by 25 or 50 basis points tomorrow,” Stephen Miller, a managing director in Sydney at BlackRock Inc. (BLK), said in an interview with Bloomberg Television.
Gross operating profits at Australian companies dropped 4 percent in the three months through March after a 6.4 percent decline the prior quarter, the Bureau of Statistics said today. Jobs advertised in newspapers and on the Internet fell 2.4 percent last month in the country, according to a report from Australia & New Zealand Banking Group Ltd. (ANZ) today.
The nation’s consumer prices rose 1.8 percent last month from a year earlier, matching the slowest pace in more than two years and less than the lower end of the RBA’s inflation target, according to an index compiled by TD Securities Inc. and the Melbourne Institute released today.
Futures traders increased their bets that the Australian dollar will weaken against the U.S. currency, figures from the Washington-based Commodity Futures Trading Commission showed. The difference in the number of wagers by hedge funds and other large speculators on a decline in the Australian dollar compared with those on a gain was 35,527 on May 29, the most on record going back to 1993.
“There’s a broader bearish sentiment about the Aussie, reflecting gloom on the global economic outlook,” said Greg Gibbs, a foreign-exchange strategist at Royal Bank of Scotland Group Plc in Sydney. “The cyclical upswing in the currency associated with the resources boom is under a cloud.”
Spain is scheduled to auction bonds on June 7 maturing in 2014, 2016 and 2022. The nation’s benchmark 10-year bond yield climbed to a six-month high of 6.7 percent on May 30.
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