Australian Dollar Drops From 4-Month High After Fed; Kiwi Falls
The Australian dollar fell from a four-month high versus its U.S. counterpart after the Federal Reserve refrained from taking more action to stimulate growth, reducing demand for riskier assets.
The currency weakened as the U.S. central bank reaffirmed its stance that it would keep interest rates low at least through 2014. Investors had speculated the Fed might signal a third round of asset purchases. The European Central Bank meets today after its president, Mario Draghi, pledged last week to do “whatever it takes” to defend the euro. New Zealand’s currency declined as U.S. stocks fell.
“People were expecting some type of changes to be announced,” Charles St-Arnaud, a foreign-exchange strategist at Nomura Holdings Inc. in New York, said in a telephone interview. He said he expects Australia’s dollar to fall without ECB action today. “History has shown that they usually under-deliver, but it seems that expectations are for them to be doing something relatively meaningful,” he said.
Australia’s dollar dropped 0.4 percent to $1.0461 yesterday in New York after rising earlier to $1.0543, the highest level since March 27. It was little changed at 82.05 yen.
New Zealand’s dollar, nicknamed the kiwi, depreciated 0.2 percent to 80.75 U.S. cents. It rose 0.3 percent to 63.34 yen.
The ECB cut its key interest rate 25 basis points, or 0.25 percent, to 0.75 percent at its last meeting July 5 amid the region’s sovereign-debt crisis.
The Standard & Poor’s 500 Index fell 0.3 percent after rising earlier as much as 0.4 percent.
To contact the reporter on this story: Lindsey Rupp in New York at firstname.lastname@example.org