Aussie Falls Against Most Peers Amid China SlowdownJohn Detrixhe and Neal Armstrong
Australia’s dollar fell against all but one of its 31 major peers amid concern sustained economic growth may be imperiled by a cooling housing market in China, its biggest trade partner.
A gauge of the dollar closed near a four-week high before consumer prices are forecast to climb for a second month above the Federal Reserve target. New Zealand’s currency advanced the most in more than a week amid bets the nation’s central bank will raise borrowing costs this week. Russia’s ruble fell against all major peers as international pressure mounted on President Vladimir Putin over the downing of a Malaysian airliner in Ukraine last week. Stocks dropped globally.
“We’re seeing some interest to sell Aussie,” Vassili Serebriakov, a New York-based foreign-exchange strategist at BNP Paribas SA, said in a phone interview. “You have a combination of somewhat higher risk aversion driven by geopolitics, weak equity markets.”
Australia’s currency fell 0.2 percent to 93.73 U.S. cents at 5 p.m. New York time after rallying 1.3 percent in June, he fifth-straight monthly gain and the biggest since March. The Aussie declined 0.2 percent versus the euro and 0.1 percent against the pound.
The dollar was little changed at $1.3524 per euro and 101.39 yen. The Japanese currency traded at 137.13 yen per euro. Japan’s markets were closed for a public holiday.
The Standard & Poor’s 500 Index dropped 0.2 percent, the Stoxx Europe 600 Index slipped 0.5 percent and Russian stocks fell for a sixth day.
Indonesiah’s rupiah climbed to the strongest in a week after presidential candidate Joko Widodo secured 52.9 percent of the 129 million votes tallied by KawalPemilu.org yesterday, a volunteer-run website that tracks actual results uploaded to the election commission’s website.
“The consensus is for the result to show Jokowi to win and the baseline scenario is for a smooth transition,” Saktiandi Supaat, head of foreign-exchange research at Malayan Banking Bhd. in Singapore said, referring to Widodo by his nickname. “If that doesn’t pan out, the move will unravel a bit.”
The rupiah gained 0.4 percent to 11,570 per dollar after advancing to 11,556, the strongest since July 10.
Other Asian currencies also advanced, with Thai baht strengthening 0.8 percent to 31.894 versus its U.S. peer, reaching an eight-month high, and Malaysia’s ringgit appreciating 0.3 percent to 3.1733 per dollar.
The ruble dropped as President Barack Obama said Putin has “direct responsibility” to compel separatists in Ukraine to let investigators recover remains and collect evidence from the Malaysian airliner crash site.
U.K. Prime Minister David Cameron said he agreed with his French and German counterparts that Europe should be ready to impose further sanctions on Russia at a meeting tomorrow.
The ruble declined 0.2 percent to 35.2146 per dollar after dropping 2.7 percent in the five days ended July 18, the biggest weekly decline since January.
The Aussie slid as China’s new-home prices fell in a record number of cities tracked by the government as developers cut prices to boost sales volume, signaling curbs will be relaxed in more cities.
The kiwi, as New Zealand’s currency is named for the image of the flightless bird on the NZ$1 coin, gained as Reserve Bank of New Zealand Governor Graeme Wheeler is forecast to raise the nation’s cash rate to 3.5 percent on July 24, according to all except one of 15 economists surveyed by Bloomberg.
New Zealand’s dollar was little changed at 86.89 U.S. cents after appreciating as much as 0.4 percent, the biggest advance since July 9.
“The market is positioned for a rate hike,” Valentin Marinov, head of European Group of 10 currency strategy at Citigroup Inc. in London, said of the kiwi. “If the Reserve Bank of New Zealand ignores recent data and maintains a constructive view on the N.Z. economy and inflation, this could corroborate market expectations of at least one more rate hike this year. Absent significant further deterioration in risk sentiment, kiwi could consolidate here.”
New Zealand has raised interest rates three times this year amid signs the global economy is becoming strong enough to withstand tighter monetary policy. Federal Reserve Chair Janet Yellen told lawmakers last week borrowing costs may rise sooner than markets expect should the U.S. labor market continue to improve faster than anticipated.
That’s after Bank of England Governor Mark Carney said last month markets were underestimating the chances that U.K. rates could increase.
Traders saw about a 47 percent chance the Fed will raise the target rate for overnight bank lending by June 2015, according to futures data compiled by Bloomberg. That’s up from a 40 percent possibility on June 30.
U.S. consumer prices climbed at an annual rate of 2.1 percent in June, matching May’s figure that was the most since October 2012, according to a Bloomberg News survey before tomorrow’s Labor Department report. The inflation rate has increased from 1.1 percent in February. The Fed’s inflation target is 2 percent.
The Bloomberg Dollar Spot Index, which tracks the currency against 10 major counterparts, traded at 1,009.74 after touching 1,011,12 on July 18, the highest since June 20.
The dollar has risen 0.2 percent in the past week, according to Bloomberg Correlation-Weighted Indexes that track 10 developed-nation currencies. The yen gained 0.5 percent, the best performer, while the euro weakened 0.2 percent.