Aussie Holds Losses on U.S. Cliff Concern; Kiwi Touches Week Low

Australia’s dollar maintained a three-day loss and the nation’s bonds rose amid concern U.S. lawmakers are deadlocked on a deal to avert the so-called fiscal cliff, reducing demand for riskier assets.

Demand for the so-called Aussie was also damped after Australian Treasurer Wayne Swan said a budget surplus for the 2012-2013 year was unlikely. New Zealand’s dollar, nicknamed the kiwi, touched a one-week low versus the greenback after data showed the nation’s gross domestic product grew less than forecast in the third quarter.

“Another 24 hours goes by and we still don’t have any concrete development on the fiscal cliff with the end of the year not far away,” said Robert Rennie, chief currency strategist at Westpac Banking Corp. in Sydney. “That’s one good argument for a lower Aussie.”

Australia’s currency was little changed at $1.0477 as of 4:25 p.m. in Sydney after falling 0.8 percent in the previous three days. The so-called Aussie dropped 0.5 percent to 88.03 yen.

The New Zealand dollar touched 83.31 U.S. cents, the lowest since Dec. 10, before trading at 83.51, 0.1 percent above yesterday’s close in New York. It slipped 0.3 percent to 70.17 yen.

Australian government bonds climbed, with 10-year debt yields dropping three basis points to 3.36 percent. New Zealand’s two-year swap rate, a fixed payment made to receive a floating rate, added 2 basis points to 2.72 percent.

Slower Growth

Officials in President Barack Obama’s administration told leaders of business and financial services groups that negotiations with House Speaker John Boehner over the fiscal cliff of tax increases and spending cuts have deteriorated, according to a person familiar with the matter.

Australia’s Swan said that tax receipts in the first few months of the fiscal year are “well below our forecasts.”

“What we’ve seen is a sledgehammer hit our revenues,” he said at a press briefing in Canberra.

New Zealand’s GDP rose 0.2 percent in the three months ended Sept. 30 from the previous quarter, the statistics bureau said today. The figure was half the 0.4 percent gain forecast by economists in a Bloomberg News survey and compares with a revised 0.3 percent expansion in the second quarter. Growth matched the central bank’s 0.2 percent forecast.

Recovery ‘Wobble’

“The GDP figures came in a shade below expectations,” said Mike Jones, a currency strategist at Bank of New Zealand in Wellington. “The market is well aware that the third quarter was a bit of a speed wobble in the New Zealand economic recovery, and the more timely forward-looking indicators are quite solid.”

New Zealand’s dollar has strengthened 4.8 percent this year, the biggest increase among the 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The Aussie has fallen 0.4 percent over the same period, while the yen is down 12 percent, the worst performer.

New Zealand Finance Minister Bill English said the nation’s growth outlook is attracting foreign bond investors, helping propel the year’s strongest-performing Group of 10 currency.

“Other people seem to see our prospects as reasonable and therefore they’re buying the currency,” English said in an interview yesterday.

The so-called Aussie and kiwi fell against the yen after technical indicators signaled recent gains in the South Pacific currencies were poised to reverse. The Australian dollar’s 14-day relative strength indicator against the yen was at 70, the level that suggests an asset is about to change direction, while the equivalent gauge for New Zealand’s currency was at 71.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE