The Australian dollar retreated from a two-week high after unexpected declines in domestic home-loan approvals and China’s imports damped the outlook for economic growth.
The so-called Aussie also weakened for the first time in three days after data showed industrial output rose by the least in three years in China, Australia’s biggest trading partner. The New Zealand currency, nicknamed the kiwi, held onto a three-day gain on speculation the Federal Reserve will add stimulus as early as this week after a Sept. 7 report showed U.S. payrolls rose less than projected in August.
“The Chinese imports figures were very weak,” said Jonathan Cavenagh, a strategist in Singapore at Westpac Banking Corp. “We can probably go a little bit weaker from here, but I still think dips in the Aussie are going to be well supported, particularly leading up to the FOMC meeting,” he said, referring to the Federal Open Market Committee.
The Aussie slid 0.3 percent to $1.0358 at 3:47 p.m. in Sydney from $1.0385 on Sept. 7, when it reached $1.0401, the strongest since Aug. 27. The currency lost 0.3 percent to 81.04 yen. The New Zealand dollar bought 81.15 U.S. cents from 81.25, after rising 2.3 percent over the previous three trading days. It was at 63.49 yen, 0.1 percent lower than the close last week.
Australian government bonds gained, with the yield on 10-year notes falling eight basis points, or 0.08 percentage point, to 3.12 percent.
The number of loans granted to build or buy houses and apartments in Australia declined 1 percent in July from June, when they increased a revised 1 percent, the statistics bureau said in Sydney today. The median estimate in a Bloomberg News survey of 16 economists was for approvals to stagnate.
China’s imports slid 2.6 percent in August from a year earlier as exports rose 2.7 percent, the customs bureau said in Beijing today. Production increased 8.9 percent, the National Bureau of Statistics said yesterday. President Hu Jintao said Sept. 8 that China’s economic expansion faces “notable downward pressure.”
“China’s slowdown is likely to remain as a major drag on the Australia’s currency,” said Takuya Kawabata, a researcher at Gaitame.com Research Institute Ltd. in Tokyo, a unit of Japan’s largest currency margin company.
The U.S. Labor Department said on Sept. 7 that the economy added 96,000 jobs in August, below the 130,000 median estimate of economists in a Bloomberg survey.
Fed Chairman Ben S. Bernanke said on Aug. 31 at a conference in Jackson Hole, Wyoming, that the costs of “nontraditional policies” appeared manageable when considered carefully. He said he wouldn’t rule out steps to lower a jobless rate he described as a “grave concern.” The policy-setting Federal Open Market Committee is scheduled to begin a two-day meeting on Sept. 12.
“Adding impetus to the AUD’s recovery at the tail end of the week was the soft U.S. payrolls report,” Ray Attrill, the Sydney-based global co-head of foreign-exchange strategy at National Australia Bank Ltd., wrote in a note to clients today. “This engendered a broad based USD sell-off as markets moved to price in the announcement of a new ‘QE’ program from the FOMC this coming Thursday.”
-- Editors: Garfield Reynolds, Naoto Hosoda