Australia’s dollar fell for a fourth day after reports showed consumer sentiment deteriorated and home loans stagnated.
Demand for the Aussie and New Zealand’s kiwi dollar was limited on concern China’s economy is slowing and that more bond defaults will follow Shanghai Chaori Solar Energy Science & Technology Co. Australia’s currency touched a six-week low versus its New Zealand counterpart as economists are certain the smaller nation’s central bank will raise interest rates tomorrow.
“The consumer sentiment data added to concerns around what’s happening” in China, said Derek Mumford, director at Rochford Capital, a currency risk-management company in Sydney. “Any spikes in the Aussie will be heavily sold into.”
The Australian dollar declined 0.2 percent to 89.58 U.S. cents as of 6:10 p.m. in Sydney from yesterday, having fallen 1.4 percent since March 6. It fell 0.2 percent to NZ$1.0572 after reaching NZ$1.0556, the lowest since Jan. 27. The kiwi fetched 84.75 U.S. cents from 84.70.
Australia’s three-year yield, among the most sensitive to interest-rate expectations, slid one basis point, or 0.01 percentage point, to 2.93 percent.
The government sold A$7 billion ($6.3 billion) of 12-year notes in the nation’s largest bond sale on record today. The sale of April 21, 2026 notes was managed by banks and exceeds the A$5.9 billion offered at the government’s last syndicated bond transaction in November. The securities were priced to yield 4.375 percent, according to an e-mailed statement from the Australian Office of Financial Management.
A consumer sentiment index for Australia fell 0.7 percent to 99.5 in March, the lowest since May, a Westpac Banking Corp. and Melbourne Institute survey showed today in Sydney. A figure below 100 indicates pessimists outnumber optimists.
“The degree of concern around jobs is very high,” Matthew Hassan, a senior economist at Westpac, said in a statement today. “We retain our view that rates will remain unchanged over the first half of 2014, but with two further 25bp rate cuts in the second half.”
The number of loans granted to build or buy houses and apartments was unchanged in January from the previous month, when it fell a revised 3.3 percent, the statistics bureau said today. The value of loans to investors declined 3.3 percent from December.
Interest-rate swaps data compiled by Bloomberg show traders see a 12 percent chance the Reserve Bank of Australia will lower its benchmark from 2.5 percent by July.
New Zealand’s two-year swap rate, a fixed payment made to receive a floating rate, added one basis point to 3.93 percent.
Chaori Solar failed to pay full interest on bonds last week, becoming the first default in the local publicly traded bond market since the People’s Bank of China started to regulate it in 1997.
The MSCI Asia Pacific Index of shares tumbled 1.5 percent. Copper futures sank to a 43-month low, while iron ore, Australia’s biggest export earner, dropped to a 1 1/2-year low.
“There’s concern about corporate bond market defaults and weakness in commodity prices,” said Rochford’s Mumford. “That has repercussions for Australia.”
The Aussie dollar will be capped around 89.70 U.S. cents in the near term and may drop toward 85 by the end of the year, he said.
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