Aussie Set for 4th Weekly Drop as RBA Lowers Inflation ForecastMasaki Kondo
Australia’s dollar was set for a fourth weekly decline, the longest stretch since June, after the Reserve Bank cut its economic growth and inflation forecasts, fanning expectations it will lower interest rates.
Today’s statement followed comments from the RBA on Feb. 5 that the nation’s inflation outlook “would afford scope to ease policy further.” The so-called Aussie earlier touched the lowest in more than three months as Asian stocks fell, sapping demand for higher-yielding currencies. The currency erased that decline and New Zealand’s dollar strengthened after data showed imports grew in China by the most in 11 months.
“The reduction in growth and inflation forecasts is a cause for concern,” said Takuya Kawabata, an analyst at Gaitame.com Research Institute Ltd. in Tokyo, a unit of Japan’s largest currency margin company. “The recent weakness in the Australian dollar in part stems from speculation of a rate cut by the RBA.”
The Aussie was at $1.0296 as of 4:41 p.m. in Sydney from $1.0282 yesterday, having lost 1.1 percent this week. It earlier fell as much as 0.3 percent to $1.0256, the lowest since Oct. 23. The New Zealand dollar, nicknamed the kiwi, gained 0.4 percent to 83.62 U.S. cents, trimming a weekly decline to 1 percent.
The MSCI Asia Pacific Index of shares slid as much as 0.7 percent.
The RBA predicted “below trend” 2013 growth of about 2.5 percent, compared with around 2.75 percent forecast in November. Consumer prices will rise 3 percent in the year to June 2013, compared with the 3.25 percent increase forecast three months earlier, the central bank said.
Traders see about an even chance that the RBA will cut the overnight cash-rate target to 2.75 percent in March from 3 percent, according to data on overnight-index swaps compiled by Bloomberg.
The yield on Australia’s three-year bond added two basis points to 2.82 percent. It has slid five basis points, or 0.05 percentage point, this week. New Zealand’s two-year interest-rate swap rose one basis point to 2.9 percent.
China’s imports jumped 28.8 percent in January from a year earlier, the fastest gain since February 2012, data from the nation’s customs administration showed today. Analysts had forecast a 23.5 percent increase.
“Today’s data clearly suggests that the Chinese economy is starting to do better, so that should help put a floor under the Aussie,” said Thomas Harr, the head of Asia local markets strategy at Standard Chartered Plc in Singapore. “The domestic economy is not doing that well, but clearly, it is a positive that China continues to improve.”
China was Australia’s No. 1 destination of exports in 2012 and the second-biggest overseas market for New Zealand.