Aussie Falls 3rd Day Amid Growth Concern; Kiwi Declines
Australia’s dollar declined for a third day against its U.S. counterpart on concern the South Pacific nation’s economy is slowing and may be in store for further interest-rate cuts by the central bank.
The so-called Aussie fell against most of its 16 major peers after Reserve Bank of Australia Governor Glenn Stevens was reported to have said there may not be a seamless “handover” from mining to other drivers of growth. New Zealand’s dollar slid after Auckland-based Fonterra Cooperative Group Ltd. (FCG), the world’s largest dairy exporter, said whole-milk prices fell for a fourth-straight auction and before data tomorrow forecast to show a moderation in the nation’s growth.
“Governor Stevens has always been worried about the output gap and what is going to fill the void when mining investment slows,” said Hans Kunnen, an economist at St. George Bank Ltd. in Sydney. “The fact that the RBA has come out and said economic growth in Australia would be slower may have dampened enthusiasm toward the Australian dollar.”
The Aussie declined 0.2 percent to $1.0515 as of 4:11 p.m. in Sydney, having fallen 0.3 percent in the previous two days. The currency slid 0.1 percent to 88.62 yen. New Zealand’s dollar, known as the kiwi, dropped 0.3 percent to 83.94 U.S. cents. It depreciated 0.2 percent to 70.74 yen.
“We’re not going to be able to absolutely guarantee seamlessly every handover from one source of demand to another,” Stevens said in an interview published today on the Australian Financial Review’s website.
The RBA cut its benchmark rate by 25 basis points to 3 percent this month, matching a half century low. Interest-rate swaps data compiled by Bloomberg show traders are pricing in a 58 percent chance the central bank will lower its benchmark to a record 2.75 percent at its next meeting in February.
Westpac Banking Corp. (WBC) and the Melbourne Institute said in a statement today their gauge of future economic growth in Australia rose 0.1 percent to 285.7 in October from the previous month, when it increased 0.6 percent.
Whole-milk powder for February delivery fell 1 percent, according to a trade-weighted index on Fonterra’s GlobalDairyTrade website.
New Zealand’s gross domestic product probably rose 0.4 percent in the three months ended Sept. 30 from the previous quarter when it expanded 0.6 percent, according to the median estimate of economists surveyed by Bloomberg News before the data is released tomorrow.
The kiwi has risen 5.3 percent this year, the sharpest advance among 10 developed market currencies tracked by Bloomberg Correlation-Weighted Indexes. The Australian dollar has fallen 0.1 percent in 2012.
To contact the editor responsible for this story: Rocky Swift at email@example.com