Australia’s dollar fell as declines in Asian shares and concern over the outcome of the U.S. presidential election sapped demand for higher-yielding assets.
New Zealand’s dollar weakened against most major peers as U.S. President Barack Obama and Republican Mitt Romney entered the final stretch of the presidential contest, where opinion polls have tightened. Losses in the so-called Aussie were limited as traders reduced bets that the Reserve Bank of Australia will cut interest rates at a meeting next week.
“If we get polls that still show that Romney and Obama look to be pretty neck-and-neck, then I think that leads to uncertainty,” said Ray Attrill, Sydney-based global co-head of currency strategy at National Australia Bank Ltd. “There is potential for some negative price action in the risk market. In that case I can see the Aussie heading back down towards $1.03.”
The Australian dollar dropped 0.2 percent to $1.0354 as of 4:19 p.m. in Sydney from the close on Oct. 26. It bought 82.46 yen from 82.62. The New Zealand dollar, nicknamed the kiwi, slid 0.2 percent to 82.09 U.S. cents. The currency weakened 0.2 percent to 65.40 yen.
The MSCI Asia Pacific Index of shares declined 0.3 percent today, following a 0.9 percent loss on Oct. 26. Australian bonds gained for a second day, pushing the yield on 10-year debt down by five basis points, or 0.05 percentage point, to 3.19 percent.
The closeness of the U.S. presidential race has intensified the contest between Obama and Romney for battleground states. The nine states, such as Iowa and Ohio, where both campaigns say the election will be decided, account for 110 of the 270 Electoral College votes needed to win the presidency.
An Ohio Newspaper Association poll released yesterday showed Obama ahead among those who’ve already voted, according to the Cincinnati Inquirer newspaper. At the same time, the poll of 1,015 likely voters from Oct. 18 to Oct. 23 showed Obama and Romney tied at 49 percent support in Ohio, a swing state with 18 electoral votes.
The U.S. securities industry canceled equity trading on all markets today, moving to protect workers as Hurricane Sandy headed toward New York City with 70-mile-per-hour winds and the threat of an 11-foot sea surge. The shutdown, announced by the Securities and Exchange Commission, may extend through Oct. 30 and followed an earlier decision by the New York Stock Exchange to close floor trading.
Overnight index swaps data compiled by Bloomberg indicate about a 65 percent chance that the Reserve Bank of Australia will cut its key rate to 3 percent from 3.25 percent at its Nov. 6 meeting, down from almost 100 percent odd seen a week ago. The odds have fallen since data last week showed a faster-than-expected gain in the nation’s consumer prices.
Futures traders increased bets that the Aussie will gain against the U.S. dollar for the first time in four weeks, figures from the Washington-based Commodity Futures Trading Commission show.
The difference in the number of wagers by hedge funds and other large speculators on an advance in the Australian dollar compared with those on a drop was 45,651 on Oct. 23, compared with the so-called net longs of 38,444 a week earlier.
“The market is 50-50 about what’s going to happen next week,” said NAB’s Attrill. “The Aussie will get some support if we see confidence in the rate cut further reduce this week.”