Australian Dollar Trades Near 3-Week Low Before Investment Data

Australia’s dollar traded near its lowest level in three weeks before a report today that may show business investment stalled in the second quarter, adding to evidence of an economic slowdown in the South Pacific nation.

Demand for the Aussie was limited as a global equity decline sapped appetite for higher-yielding assets, after the U.S. and the U.K. said they’re prepared to take military action against Syria without authorization from the United Nations Security Council. The Australian currency touched a week-low versus its New Zealand peer after volatility climbed to the highest in six weeks.

“There’s a bit of price risk today with the private capital expenditure report,” said Janu Chan, an economist at St. George Bank Ltd. in Sydney. “The big drivers this week are developments in Syria and a general sense of risk aversion within financial markets, and in that environment the Aussie tends to weaken.”

The Australian dollar added 0.1 percent to 89.49 U.S. cents as of 10:11 a.m. in Sydney after sliding as much as 1 percent yesterday to 88.93 cents, the weakest since Aug. 5. It lost 0.1 percent to NZ$1.1447 after earlier touching NZ$1.1439, the least since Aug. 22.

Australia’s 10-year (GACGB10) government bond yield climbed two basis points, or 0.02 percentage point, to 3.93 percent, its first advance in a week. The rate on the nation’s sovereign notes due in three years was little changed at 2.72 percent.

The MSCI World Index of developed-nation stocks declined 0.3 percent yesterday, falling for a third-straight session.

The Australian Bureau of Statistics will probably say today capital expenditure stalled in the three months through June from the previous period, when it fell 4.7 percent, according to the median estimate of economists surveyed by Bloomberg News.

Volatility on one-month Aussie options was at 13.18 percent today after rising to 13.32 percent yesterday, the highest since July 15.

To contact the reporter on this story: Kristine Aquino in Singapore at kaquino1@bloomberg.net

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

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