Aussie Dollar Falls as Shorts Climb, Before U.S. Confidence Data

Australia’s dollar extended declines versus the greenback from last week before U.S. data forecast to show improvement in consumer confidence that may add to the case for the Federal Reserve to slow stimulus.

Fed Chairman Ben S. Bernanke said last week the central bank may cut the pace of asset purchases if policy makers see indications of sustained growth. The currencies of Australia and New Zealand slid against their major peers on prospects slowing growth in China will curb exports for the South Pacific nations.

“The Fed’s slowing of stimulus would erode the Aussie dollar’s yield advantage,” said Takuya Kawabata, an analyst at Gaitame.com Research Institute Ltd. in Tokyo. “If data this week confirm a slowdown in the Chinese economy, the Oceanic currencies will come under further pressure.”

The Australian dollar fell 0.2 percent to 96.32 U.S. cents as of 3:26 p.m. in Sydney from May 24, when it completed a 0.8 percent weekly slide, its third straight decline. It dropped to 95.94 on May 23, a level unseen since June 1.

The Aussie lost 0.4 percent to 97.36 yen. The currency touched NZ$1.1886, the lowest since January 2009, before trading at NZ$1.1918, little changed from last week. It dropped to 99.23 Canadian cents, the weakest since August 2011, before trading 0.1 percent lower at 99.49.

New Zealand’s currency slid 0.1 percent to 80.88 U.S. cents. The kiwi lost 0.3 percent to 81.77 yen.

Australia’s 10-year bond yield fell three basis points to 3.28 percent, snapping a five-day advance. New Zealand’s two-year swap rate, a fixed payment made to receive a flowing rate, was little changed at 2.91 percent.

U.S. Economy

The Conference Board’s index of U.S. consumer sentiment probably climbed to 71 this month from 68.1 in April, according to the median estimate of economists surveyed by Bloomberg News before the New York-based private research group releases the data tomorrow. U.S. markets are closed for a holiday today.

Chinese President Xi Jinping last week signaled a tolerance for slower expansion to avoid environmental degradation as policy makers outlined plans for the private sector to take a bigger role in boosting growth.

Data last week from HSBC Holdings Plc and Markit Economics showed a preliminary reading for a purchasing manager’s index of Chinese manufacturing fell to 49.6 in May, below the 50.4 estimated by economists in a Bloomberg survey. A reading below 50 indicates a contraction. China is the biggest trading partner for both Australia and New Zealand. A PMI reading from the government is due for release on June 1.

Net income at Chinese industrial companies increased 9.3 percent in April from a year earlier to 437 billion yuan ($71 billion), up from a 5.3 percent increase the previous month, the National Bureau of Statistics said on its website today.

Aussie Shorts

Future traders increased bets that the Australian dollar will decline against the greenback, figures from the Washington-based Commodity Futures Trading Commission show.

The difference in the number of wagers by hedge funds and other large speculators on a drop in the Aussie compared with those on a gain -- so-called net shorts -- was 32,409 on May 21, compared with net shorts of 13,450 a week earlier, and the most bearish since the week ended June 12.

New Zealand’s dollar has strengthened 7.8 percent in the past 12 months, the second biggest increase among 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The Aussie has fallen 1.7 percent, while the yen is down 23 percent, the worst performer.

Barclays Plc recommends shorting the Australian dollar against its Canadian and New Zealand counterparts.

“Lingering concerns about China growth is likely to weigh further on” Australia’s dollar, Barclays analysts including New-York based Yuki Sakasai, wrote in a note to clients dated yesterday.

-- Editors: Rocky Swift, Jonathan Annells.

To contact the reporter on this story: Mariko Ishikawa in Tokyo at mishikawa9@bloomberg.net;

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

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