The Australian dollar remained lower following a decline yesterday amid speculation a report tomorrow will show a slowdown in capital expenditure growth, damping the outlook for the economy and the currency.
The so-called Aussie dropped for a third day versus the yen as investors boosted bets the Reserve Bank of Australia will cut rates at its next meeting on Dec. 4. Demand for New Zealand’s dollar was tempered after the country’s central bank Governor Graeme Wheeler said the local currency’s gains have hurt manufacturing and as Asian stocks retreated. The South Pacific currencies were supported after China’s commerce minister said he sees his nation’s trade improving in the second half of 2013.
“If non-mining capital investment doesn’t show signs of picking up in 2013, that suggests that policy needs to be easier and that would be consistent with a rate cut next month” from the RBA, said Andrew Salter, a currency strategist in Sydney at Australia & New Zealand Banking Group Ltd. “It might weigh on the currency in the very short-term.”
The Australian dollar bought $1.0447 as of 4:46 p.m. in Sydney after falling 0.2 percent yesterday to $1.0446. It dropped 0.4 percent to 85.50 yen. New Zealand’s currency fetched 82.10 U.S. cents from 82.03 and was at 67.19 yen, 0.3 percent below yesterday’s close.
The yield on 10-year Australian government bonds fell eight basis points, or 0.08 percentage point, to 3.21 percent. New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, declined 1 1/2 basis points to 2.605 percent. The MSCI Asia Pacific Index of shares lost 0.6 percent.
Australian business investment probably rose 2 percent in the three months through September after advancing 3.4 percent in the previous quarter, according to the median estimate of economists surveyed by Bloomberg News. The statistics bureau will release the figures tomorrow.
Data published today showed the value of construction work completed in Australia in the third quarter rose 1.7 percent after rising a revised 0.9 percent in the three months ended June 30.
Interest-rate swaps data compiled by Bloomberg show traders see a 66 percent chance the RBA will cut the overnight cash rate target by 25 basis points to 3 percent at its next gathering. That’s up from 60 percent yesterday.
ANZ is among 15 of 26 companies polled by Bloomberg this month that are predicting a quarter-percentage point interest-rate reduction from the Australian central bank.
Reserve Bank of New Zealand Governor Wheeler declined to comment on the economic outlook or interest rates when he testified before parliament’s finance and expenditure select committee about the central bank’s 2011-12 annual report. Wheeler is expected to hold New Zealand’s borrowing costs at a record-low 2.50 percent on Dec. 6, according to a Bloomberg survey.
Chinese Commerce Minister Chen Deming said trade will improve in the second half of 2013 from the first six months of the year, speaking today at a Caijing financial forum in Beijing. China is the largest buyer of Australia’s overseas shipments and is New Zealand’s second-largest export destination.