Aussie Dollar Declines After Building Approvals Drop
Australia’s dollar declined against most of its major peers and the country’s bonds rose after a government report showed July building approvals dropped more than economists estimated.
The so-called Aussie fell to one-month low as evidence the U.S. economy is improving dimmed prospects that Federal Reserve Chairman Ben S. Bernanke will signal further stimulus when he speaks tomorrow in Jackson Hole, Wyoming. New Zealand’s dollar gained after a ANZ National Bank Ltd. survey showed the country’s business confidence rose a second month in August on optimism in the housing industry.
“The Aussie dollar has been far from closely resembling the fundamentals for quite some time,” said Gavin Stacey, chief rate strategist in Sydney at Barclays Plc. “The market seems to be playing a little bit of catch-up” after the poor domestic data, he said.
The Australian dollar touched $1.0318, the weakest since July 26, before trading at $1.0329 as of 5:25 p.m. in Sydney, 0.2 percent below yesterday’s close in New York. It lost 0.3 percent to 81.25 yen after earlier touching 81.14, also the lowest since July 26.
New Zealand’s dollar, known as the kiwi, added 0.1 percent to 80.15 U.S. cents, after earlier falling as low as 80.01 cents, the weakest since July 27.
Australian 10-year bond yields fell for a 10th straight day, poised for the longest stretch of declines since at least 1990, when Bloomberg began compiling daily data. The yield was at 3.12 percent after earlier falling as much as eight basis points, or 0.08 percentage point, to 3.11 percent, the lowest since Aug. 3.
In Australia, the number of permits granted to build or renovate houses and apartments declined 17.3 percent in July from a month earlier, the country’s statistics bureau said today. That was more than three times the median forecast of a 5 percent drop in a Bloomberg News survey of 18 economists.
The Australian dollar has fallen 3.1 percent in the past month, the worst performance among 10 currencies tracked by Bloomberg Correlation-Weighted Indexes. New Zealand’s dollar weakened 2.2 percent over the same period, the second-biggest loser.
New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, fell three basis points to 2.67 percent. It earlier dropped to 2.63 percent, the lowest since July 27.
An ANZ National Bank survey showed a net 19.5 percent of companies polled in New Zealand expect the economy to improve in the next 12 months, up from 15.1 percent in July. The net figures, which subtract pessimists from optimists, are recovering from a 15-month low in June.
Demand for the South Pacific nations’ currencies was limited before U.S. data forecast to show initial jobless claims fell and personal spending rebounded. Consumer spending probably climbed 0.5 percent in July after being unchanged in June, according to the median estimate of economists surveyed by Bloomberg News before the Commerce Department releases figures today. A separate poll shows applications for jobless benefits may drop for the first time in three weeks.
A Fed report yesterday said that the world’s largest economy continued to expand “gradually.” A strengthening economic outlook would reduce pressure on the Fed to add to monetary easing, a process which tends to debase the U.S. currency.
“I suspect what we will hear from Bernanke is a familiar line that they are prepared to take further action if needed, but that he is not going to declare action just yet,” said Sean Callow, a senior currency strategist at Westpac Banking Corp. (WBC) in Sydney. “The Aussie is looking very tired.”
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