New Zealand’s currency dropped to the lowest level in almost eight months on concern U.S. lawmakers may announce they failed to reach an agreement on budget cuts, discouraging demand for higher-yielding assets.
Australia’s dollar declined to a six-week low against the dollar as stocks slid globally. The kiwi remained weaker even after a report showed credit card spending in the South Pacific nation rose last month at a faster rate.
The U.S. committee’s disagreement “can weigh on the Aussie and kiwi,” said Greg Gibbs, a currency strategist at Royal Bank of Scotland Group Plc in Sydney. “It really does weaken the outlook for the U.S. economy next year.”
New Zealand’s currency fell 1.4 percent to 74.63 U.S. cents at 10:43 a.m. New York time, after sliding to 74.61 cents, the lowest level since March 24. The Australian dollar decreased 1.8 percent to 98.32 U.S. cents after earlier touching 98.30, the lowest level since Oct. 10.
The Standard & Poor’s 500 Index dropped 2.2 percent, and the MSCI World Index of equities fell 2.1 percent.
The Aussie slid following last week’s 2.6 percent drop as U.S. Senator Jon Kyl of Arizona, a Republican member of the bipartisan deficit-reduction supercommitee, said on CNBC today that the team will make an announcement “toward the end of the day.” It’s expected to say the panel can’t agree on determining deficit reductions of at least $1.2 trillion.
New Zealand’s credit card spending rose 7.9 percent in October from a year earlier after a 5.3 percent gain in the previous month, a Reserve Bank report showed today.