The Australian and New Zealand dollars slumped against their U.S. counterpart on concern the European economy is stalling, reducing demand for currencies linked to global growth.
The so-called Aussie weakened against 10 of its 16 major counterparts before German reports this week that are forecast to show declines for gauges of investor confidence and manufacturing in Europe’s largest economy. New Zealand’s dollar dropped versus the greenback for the first time in four days after European finance ministers failed to persuade investors they can avert a Greek default.
“I’m bearish” on the Australian and New Zealand currencies, said Imre Speizer, a strategist in Auckland at Westpac Banking Corp., Australia’s second-largest lender. “The euro economy is weakening, clearly, and there’s a good chance that it will slide towards a recession again.”
Australia’s dollar sank 1.5 percent to $1.0207 at 11:15 a.m. in New York from $1.0361 on Sept. 16. It fetched 78.01 yen from 79.56. New Zealand’s currency, nicknamed the kiwi, slid 1 percent to 82.07 U.S. cents from 82.91 cents. It bought 62.72 yen from 63.67.
The Aussie may drop below $1 in the next few weeks, while the New Zealand dollar will decline to less than 80 U.S. cents, Speizer said.
MSCI’s index Asia Pacific shares excluding Japan dropped 2.4 percent, damping demand for higher-yielding currencies. Markets in Japan were closed for a holiday.
The ZEW Center for European Economic Research’s index of investor and analyst expectations for Germany retreated to minus 45 this month, the lowest since December 2008, according to economist estimates before the report tomorrow. A purchasing managers index for manufacturing dropped to 50.5 in September from 50.9 in August, a separate survey of economists showed before a report from Markit Economics on Sept. 22.
German Finance Minister Wolfgang Schaeuble and Bundesbank President Jens Weidmann rejected using the European Central Bank to boost the euro-area rescue fund’s firepower, rebuffing a suggestion by U.S. Treasury Secretary Timothy Geithner at a two-day meeting ended Sept. 17.
New Zealand’s Prime Minister John Key told reporters today that the European and U.S. debt crisis has had implications for his nation’s capacity to raise money in global markets.