Aussie Drops to Six-Month Low on China, Fed; N.Z. Dollar Slumps

Australia’s dollar slid to a six-month low versus its U.S. counterpart, falling below parity for the first time since August, after a survey indicated that manufacturing in China, the nation’s biggest trading partner, may weaken.

New Zealand’s currency dropped to the lowest level in more than four months against the greenback after a government report showed second-quarter growth trailed economists’ estimates. The two South Pacific currencies fell versus most major peers as stocks and commodities tumbled after the Federal Reserve said yesterday the U.S. economy faces “significant downside risks.”

“The key issue is the current appraisal of a much softer global economic environment and the impact that’s having on the Australian economy,” said Tim Riddell, Singapore-based head of global markets research for Asia at Australia & New Zealand Banking Group Ltd. “China is going to have an impact on sentiment towards the Aussie because the Aussie is seen as a freely tradable proxy for the growth profile in, particularly, China, because of its resource need.”

Australia’s dollar fell to as low as 97.35 U.S. cents, the least since March 17, before trading at 97.81 cents, down 2.6 percent, at 1:19 p.m. in New York. The last time the currency fell below parity was on Aug. 9. The Aussie weakened 2.7 percent to 74.69 yen and reached 74.20 yen, the least since August 2010.

New Zealand’s currency dropped 2.6 percent to 78.09 U.S. cents, from 80.14 yesterday, and slumped to 77.62, the least since May 16. It declined 2.6 percent to 59.66 yen and touched 59.16 yen, the weakest since March.

Commodities, Stocks

The Thomson Reuters/Jefferies CRB Index of raw materials dropped 4.4 percent. The Standard & Poor’s 500 Index retreated 3.5 percent.

China’s manufacturing may contract for a third month in September as measures of export orders and output decline. A preliminary reading of 49.4 for a manufacturing index released by HSBC Holdings Plc and Markit Economics today compared with final readings of 49.9 for August and 49.3 for July. A number below 50 indicates a contraction.

New Zealand’s economy expanded 0.1 percent in the second quarter from previous three months, Statistics New Zealand said in Wellington. That was less than all but one of 15 forecasts in a Bloomberg News survey of economists.

The Fed said yesterday after a two-day meeting it will replace $400 billion of short-term U.S. debt in its portfolio with longer-term securities to spur growth.

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