Australia’s dollar dropped to a six-year low on signs of sluggish consumer spending and after iron ore prices slid the most in two months.
The Aussie fell for a third day against the U.S. dollar, the longest streak in a month, as data showed retail sales rose 0.3 percent in May from the previous month, compared with the median economist estimate for 0.5 percent growth. It’s down versus 12 of its 16 major peers this week.
“The economy is still struggling to make that transition from mining-led growth to other forms of growth,” said Joseph Capurso, a strategist at Commonwealth Bank of Australia in Sydney. “That is just going to keep bearing down on the Aussie.”
The Australian dollar slumped 1.6 percent to 75.15 U.S. cents as of 4:14 p.m. London time, after falling as low as 75.09 cents, a level unseen since May 2009. It slumped 1.8 percent to 92.21 yen, after being at 92.09, the weakest level since April 21.
The decline in the Aussie will be welcome news for Reserve Bank of Australia Governor Glenn Stevens who has called for a weaker currency to stimulate economic growth. The 1.8 percent decline this week wiped out a 1.3 percent gain in the three months ended June 30, the first quarterly gain in a year.
In a December media interview, Stevens said 75 cents was a more appropriate level. The RBA has also sought to reduce the attractiveness of the Australian dollar by cutting its cash benchmark rate by 2.75 percentage points since late 2011 to a record low 2 percent. That still leaves it above every other developed-nation peer except for New Zealand.
Iron ore with 62 percent content delivered to Qingdao, China slid 0.7 percent to $55.26 a dry metric ton on Friday, falling for a seventh day, according to Metal Bulletin Ltd. The price has dropped 11 percent this week.
“Things could get ugly” for the Aussie, National Bank of Canada analysts including Toronto-based managing director of foreign exchange Jack Spitz, wrote in an e-mailed note. A break below 75 cents would highlight 72.70 cents, they wrote.