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Aussie Touches Week Low on Signs of China Contraction

Sept. 20 (Bloomberg) -- Australia’s currency fell to its lowest in more than a week after a gauge signaled Chinese manufacturing may contract for an 11th month, clouding prospects for the South Pacific nation’s resource exports.

The so-called Aussie weakened versus all of its 16 major counterparts before data today that may show factory output and services in the 17-nation euro region shrank. New Zealand’s dollar, known as the kiwi, slid as Asian stocks declined. It rose earlier after government figures showed the nation’s second-quarter growth exceeded economist estimates.

“The market was probably expecting a bit more of a bounce” in the Chinese data, said Emma Lawson, a Sydney-based currency strategist at National Australia Bank Ltd. “The Aussie is a little bit lower. There’s just a little bit of disappointment there.”

The Aussie lost 0.8 percent to $1.0392 as of 4:24 p.m. in Sydney after earlier touching $1.0379, the lowest since Sept. 11. It fell to 81.08 yen, the weakest since Sept. 13, before trading at 81.20 yen, 1.1 percent below its close in New York. The kiwi dropped 0.4 percent to 82.31 U.S. cents after gaining as much as 0.4 percent. It declined 0.7 percent to 64.33 yen.

The MSCI Asia Pacific Index of shares slid 1.3 percent, set for its biggest one-day loss since July 23.

Chinese Manufacturing

A preliminary reading released today showed a gauge by Markit Economics and HSBC Holdings Plc for manufacturing in China was 47.8 this month from 47.6 in August. The index is based on a poll of purchasing managers in the industry. China is Australia’s largest trading partner and New Zealand’s second-biggest export destination.

“I can see the currency moving a little lower as people are concerned about the Chinese economy,” Matthew Lifson, a foreign exchange trader at Cambridge Mercantile Group, said on Bloomberg Television today. The Aussie may end the year at $1.0150, he said.

A separate euro-zone composite index for manufacturing and services was probably at 46.6 this month, little changed from 46.3 in August, according to the median estimate of economists surveyed by Bloomberg News. Markit will also release the figure today. For both measures, a reading below 50 indicates contraction.

Australia’s dollar fell 3.1 percent in the past month, the worst performance among 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. New Zealand’s dollar lost 0.6 percent.

The so-called kiwi gained earlier against the U.S. dollar and Japanese yen after Statistics New Zealand said in a report gross domestic product rose 2.6 percent in the three months ended June from a year earlier, the fastest pace in two years.

The GDP report “is a genuine upside surprise,” said Imre Speizer, a strategist in Auckland at Westpac Banking Corp., Australia’s second-largest lender. “I think we’ll have some reverberation throughout the day for the currency.”

New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, lost 1 1/2 basis points to 2.695 percent. Australia’s 10-year yield declined 11 basis points to 3.24 percent.

To contact the reporter on this story: Kristine Aquino in Singapore at kaquino1@bloomberg.net

To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net

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