Aussie, Kiwi Slide on Fed Easing Outlook, Before China PMI Data

The Australian dollar fell to its lowest level in almost a year before U.S. data that may show a recovery in the world’s largest economy is being sustained.

The Aussie extended its decline this month to 6.8 percent, set for the biggest drop since September 2011, after Federal Reserve Chairman Ben S. Bernanke said yesterday the central bank may taper monthly bond purchases if it’s confident of sustained gains in the economy. The New Zealand dollar dropped to its weakest in eight months before a private report forecast to show Chinese manufacturing growth stalled in May.

“It’s the question now of when does the stimulus start to be wound back?” said Imre Speizer, a strategist in Auckland at Westpac Banking Corp. (WBC) “There will be further fallout to Bernanke’s remark over the next few days and that will probably push the U.S. dollar higher and push currencies like the Aussie and kiwi lower.”

The Australian dollar dropped 0.3 percent to 96.69 U.S. cents as of 9:54 a.m. in Sydney after touching 96.55, the least since June 4. It fell 0.3 percent to 99.72 yen. The kiwi declined 0.4 percent to 80.45 U.S. cents and touched 80.33, the weakest since Sept. 7. It slid 0.4 percent to 82.97 yen.

Fewer Americans filed claims for jobless benefits last week, the U.S. Labor department is forecast to say today.

The number of applications for unemployment insurance payments fell by 15,000 to 345,000 in the week ended May 18, according to the median estimate in a Bloomberg News survey.

Minutes of the Fed’s last meeting released yesterday showed that a “number” of officials were willing to taper bond buying as early as the next meeting in June if economic reports show “evidence of sufficiently strong and sustained growth.”

A Purchasing Managers’ Index for China from HSBC Holdings Plc and Markit Economics was probably unchanged at 50.4 in May, according to a Bloomberg survey before the report today. A reading above 50 indicates expansion.

To contact the reporter on this story: Candice Zachariahs in Sydney at czachariahs2@bloomberg.net

To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net

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