Australia Dollar Heads for Weekly Drop; Kiwi Reaches 10-Day Low
The Australian dollar headed for the first weekly loss versus its U.S. peer this month as Prime Minister Julia Gillard said a budget surplus for the fiscal year is unlikely and risk appetite ebbed on concern U.S. leaders are struggling to resolve a budget showdown.
The Aussie has weakened on concern the South Pacific nation’s economy is slowing and may be in store for further interest-rate cuts from the Reserve Bank of Australia. New Zealand’s currency reached the lowest in more than a week versus the greenback after the nation’s economy grew more slowly than forecast and data showed business confidence slipped.
Australia’s currency was little changed at $1.0483 yesterday in New York, headed for a weekly loss of 0.4 percent, its first since the five days ended Nov. 30. The currency traded at 88.44 yen.
The New Zealand dollar, nicknamed the kiwi, touched 83.19 U.S. cents, the weakest since Dec. 10, before trading at 83.39. It traded at 70.37 yen.
Gillard staked her economic credibility partly on delivering the first surplus since the 2009 global recession. Threatening the commitment is a weaker international outlook, lower prices of commodity exports and a high local dollar that’s hurting non-resource industries such as tourism and manufacturing. The RBA cut the key interest rate to 3 percent on Dec. 3, from 3.25 percent.
New Zealand’s GDP rose 0.2 percent in the three months ended Sept. 30 from the previous quarter, the statistics bureau said. A Bloomberg News survey of economists forecast a 0.4 percent gain. Data from ANZ Bank New Zealand Ltd. showed 22.7 percent of companies expect the economy will improve over the next 12 months, versus 26.4 percent in November.
The stalled U.S. budget talks won’t be resolved until the last week of 2012 or early in 2013 with negotiations between the White House and Congress at a standstill as lawmakers plan to leave Washington for the Christmas holiday. More than $600 billion in automatic spending cuts and tax increases are set to go into effect if an agreement isn’t reached.
To contact the reporter on this story: John Detrixhe in New York at firstname.lastname@example.org
To contact the editor responsible for this story: Dave Liedtka at email@example.com