The Australian and New Zealand dollars touched the lowest levels this month against the yen as data from the U.S. to China to Japan pointed to a slowdown in the world’s largest economies.
Both currencies remained lower versus the dollar following a drop on July 6 as Asian stocks extended a global rout, sapping demand for currencies linked to economic growth. Data published in Japan today showed the nation’s machinery orders fell the most in at least seven years, while U.S. data last week showed weaker-than-estimated jobs growth in June. China said today consumer prices rose at the slowest pace in more than two years.
“In the near term, we could expect to see the Australian dollar continuing to come lower in what may be a fairly risk-averse market environment,” said Ray Attrill, global co-head of foreign-exchange strategy at National Australia Bank Ltd.
The so-called Aussie slid to 80.96 yen, the lowest since June 29, before trading at 81.20 as of 4:22 p.m. in Sydney, down 0.2 percent from the end of last week. It fell 0.2 percent to $1.0190 after losing 0.7 percent on July 6.
New Zealand’s dollar, known as the kiwi, touched 63.30 yen, the weakest this month, and was 0.2 percent below last week’s close at 63.45. It fell 0.2 percent to 79.62 U.S. cents following a 0.7 percent slide at the end of last week.
The Australian dollar may weaken to 98 U.S. cents by the end of September and 97 by the year-end, Attrill forecast.
The MSCI Asia Pacific Index of shares lost 1.5 percent, after a 0.9 percent drop in the Standard & Poor’s 500 Index on July 6.
Australian government bonds rallied, pushing the yield on benchmark 10-year debt down as much as 12 basis points, or 0.12 percentage point, to 2.98 percent. The rate on the 15-year note, the country’s longest-dated debt, touched 3.23 percent, the lowest since June 5.
U.S. employment rose by 80,000 in June after a 77,000 increase in May, Labor Department figures showed at the end of last week. Economists surveyed by Bloomberg News had projected a gain of 100,000.
Machinery orders in Japan, an indicator of capital spending, slumped 14.8 percent in May from April, the Cabinet Office said today. Data from China’s National Bureau of Statistics showed consumer prices rose 2.2 percent in June from a year earlier, the slowest pace in 29 months.
The New Zealand and Australian dollars were the best performers in the past month among 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The kiwi added 3.6 percent during the period, while the Aussie gained 2.9 percent.
The Australian dollar is trading near the 50 percent retracement level of $1.0219 from the Feb. 29 high to the June 1 low as well as its 200-day moving average of $1.0265, data compiled by Bloomberg show. After the recent advance in the currency, investors are inclined to “take profit” around these levels, said Hideki Shibata, a senior strategist for rates and foreign exchange at Tokai Tokyo Research Center Co.
China’s Premier Wen Jiabao said downward pressure on the the world’s second biggest economy is still “relatively large,” the official Xinhua News Agency reported yesterday. He pledged to “unswervingly” continue property controls and prevent prices from rebounding, Xinhua said.
The country lowered interest rates on July 5 for the second time in a month. Speculation that China will reduce borrowing costs again may lend strength to commodities prices as well as the Aussie and kiwi.
“The slowdown in inflation gives China room to cut interest rates more,” said Tokai Tokyo’s Shibata. “China’s economy is likely to support the Australian and New Zealand currencies based on the scenario that it will rebound in the second half of this year.”
China is Australia’s biggest trading partner and New Zealand’s second-largest export destination.