Aussie Drops With Currencies of Metal Producers on Chinese Data

Updated on
  • Bloomberg dollar index rises to six-week high on haven demand
  • Brazil's real extends slump since China devaluation to 14%

Australia’s dollar slid for a third day, falling with peers from countries that depend on metals for their exports, after a decline in a gauge of Chinese manufacturing to a 6 1/2 year low reignited concern that the global economic outlook is worsening. Emerging-market currencies retreated.

The Aussie and the South African rand both reached their weakest levels in almost two weeks against their U.S. counterpart. Currencies of Indonesia, South Korea and Malaysia also slipped at least 0.6 percent as a gauge of the dollar jumped to its highest level in six weeks.

“Investors wanted some good news out of China and when they got that weaker figure it once again hammered home that perhaps that the bottom is not there yet and that kicked off further safety seeking,” said Peter Rosenstreich, head of market strategy at Swissquote Bank SA in Gland, Switzerland. “The dollar and the yen are going to be the biggest beneficiaries of safe-haven trades. All the data is pointing to more downside in China.”

The latest selloff has pushed declines in the Aussie, New Zealand dollar and rand to at least 3 percent since China devalued the yuan on Aug. 11, while Brazil’s real extended its slide to 14 percent.

Australia’s dollar dropped 0.5 percent to 70.55 U.S. cents at 7:11 a.m. New York time, after touching 70.19 cents, the lowest since Sept. 10. South Africa’s rand was little changed at 13.6738 per dollar after weakening as much as 0.8 percent to 13.7925. New Zealand’s currency fell 0.1 percent to 62.91 U.S. cents.

A preliminary Purchasing Managers’ Index from Caixin Media and Markit Economics fell to 47 this month, missing the median estimate of 47.5 in a Bloomberg survey of analysts and down from a final reading of 47.3 in August. A figure below 50 indicates contraction.

Euro, Yen

The Bloomberg Dollar Spot Index, which tracks the currency against 10 major counterparts, added less than 0.1 percent after climbing to the highest since Aug. 12. The euro rose 0.4 percent to $1.1161. The yen was little changed at 120.23 per dollar and weakened 0.4 percent to 134.18 per euro.

The currencies of commodity-producing nations including Australia and New Zealand have been under pressure this week after the Federal Reserve flagged concern about global growth following its September policy meeting, when it decided to keep U.S. interest rates unchanged.

“This is a more widespread risk-aversion story given the backdrop of concern about global growth and concern about emerging-market performance,” said Imre Speizer, a senior market strategist at Westpac Banking Corp. in Auckland. “The dollar does very well and the yen does, probably, even better in this environment.”