Australia’s dollar weakened against all its major peers on speculation an advance toward 90 U.S. cents was overdone after data showed traders increased bearish bets to the most in almost four months.
The Aussie fell for the first time in four days versus the greenback, retreating from the highest level in almost a month, as a technical indicator signaled a reversal. The total value of trade between Australia and its biggest trading partner China fell for the first time in five months. Australia’s government bonds rose following a gain in U.S. Treasuries overnight.
“It’s notable that speculators continue to punish the Aussie dollar even though there seems to be no fresh reason to do so,” said Sean Callow, the Sydney-based senior currency strategist at Westpac Banking Corp. “It provides us a reminder that 90 U.S. cents look as though it is hard work near term. On the downside, it’s fair game anywhere to about 88.50.”
The Australian currency fell 0.6 percent to 89.18 U.S. cents as of 5:17 p.m. in Sydney. It touched 90.05 on Jan. 3, the highest level since Dec. 12. The Aussie slipped 0.3 percent to NZ$1.0785 and declined 0.3 percent to 93.15 yen. New Zealand’s dollar dropped 0.3 percent to 82.68 U.S. cents.
Yields on 10-year Australian government debt slumped six basis points, or 0.06 percentage point, to 4.32 percent, after yesterday touching 4.41 percent, the highest since Dec. 9.
The difference in the number of wagers by hedge funds and other large speculators on a decline in the Aussie compared with those on a gain -- so-called net shorts -- rose to 57,414 in the week to Dec. 31, the most since the period ended Sept. 10, figures released yesterday by the Washington-based Commodity Futures Trading Commission show.
The Australian dollar gained for the first time in 11 weeks over the five days to Jan. 3, snapping the longest losing streak since 1982. It tumbled 14 percent against the greenback in 2013, the most among its Group of 10 peers after the yen.
Stochastics, which study the velocity of price movements, suggest the Aussie may have risen too quickly, with the K-line climbing to 78 yesterday, above the threshold of 70 that some traders see as signaling a currency is overbought.
Australia’s currency will end the year at 87 U.S. cents, according to the median forecast of analysts polled by Bloomberg. The world’s most accurate forecaster in 2013, Macquarie Group Ltd., sees it dropping to 82.
Reserve Bank of Australia Governor Glenn Stevens said in parliamentary testimony last month that an exchange rate above 90 U.S. cents is “unlikely to be a sustainable equilibrium for us over time.” He also said there were signs that low borrowing costs are supporting spending.
“We’re looking for the Aussie to depreciate through the year,” said Emma Lawson, a senior currency strategist at National Australia Bank Ltd. in Sydney. “We’re looking for the RBA to ease policy further.”
The Australian central bank has cut the benchmark lending rate by 2 1/4 percentage points since October 2011 to a record 2.5 percent to support a rebalancing of the economy as a resource investment boom ends.
Australia’s total trade with China fell to A$13.6 billion ($12.1 billion) in November, the first decline since a 6.5 percent drop in June. The trade deficit narrowed to A$118 million from a revised A$358 million the previous month.