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Aussie Falls to 11-Month Low as Budget Forecasts Slower Growth
Australia’s dollar fell to an 11-month low as the government’s forecast of slower growth fanned speculation the Reserve Bank will cut borrowing costs to support the economy.
Growth in real gross domestic product will probably decelerate to 2.75 percent in the 12 months starting July 1, from 3 percent this fiscal year, the government said today when releasing the federal budget. Traders see a 65 percent chance that the central bank will lower the benchmark rate from a record-low 2.75 percent within three months, according to data on overnight-index swaps compiled by Bloomberg.
“The growth projections are downbeat,” said Hideo Shimomura, who helps oversee the equivalent of $59 billion in Tokyo as chief fund investor at Mitsubishi UFJ Asset Management Co., a unit of Japan’s largest publicly-traded bank. “They will struggle to get out of the deficit. It could lead to further easing” from the Reserve Bank, he said.
The Australian dollar touched 99.08 U.S. cents, the weakest since June 12, before trading at 99.22 as of 8:58 p.m. in Sydney, down 0.3 percent from the close yesterday. The so-called Aussie was falling for a seventh day, heading for the longest losing streak since August 2011.
New Zealand’s currency lost 0.2 percent to 82.37 U.S. cents.
Futures on Autralia’s three-year notes were at 97.44 from 97.41 yesterday.
The unemployment rate is estimated to rise to 5.75 percent by June 2014 from 5.5 percent, Treasury said.
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