Aussie Falls on Outlook for Lower Yield Advantage; Kiwi Declines
Australia’s dollar fell for a second day before U.S. data that may show retail sales climbed, adding to the case for the Federal Reserve to taper monetary stimulus that tends to weaken the greenback.
The Aussie slid against 14 of its 16 major peers ahead of a private report on domestic business confidence that may affect the outlook for the Reserve Bank of Australia’s monetary policy. New Zealand’s dollar declined for a second day after completing its biggest weekly climb since 2011.
“The interest-rate differential of Australia and the rest of the world is narrowing as the RBA eases rates and as rates move higher in economies such as the United States,” said Andrew Salter, a currency strategist at Australia & New Zealand Banking Group Ltd. in Sydney. “We think it’s going to depreciate” in the medium term, he said of the Aussie.
Australia’s currency lost 0.4 percent to 91.14 U.S. cents as of 10:07 a.m. in Sydney from yesterday. The kiwi dollar dropped 0.5 percent to 79.76 U.S. cents. It posted a 2.6 percent weekly gain on Aug. 9, the most since December 2011.
“The New Zealand dollar has been outperforming for so long that it’s just probably giving back a bit of that,” ANZ’s Salter said.
New Zealand’s two-year swap rate reached 3.43 percent, the highest level since August 2011.
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