The Australian dollar fell from near its strongest since exchange controls were removed in 1983 on speculation the Federal Reserve may add less monetary stimulus than some expect, damping demand for higher-yielding assets.
New Zealand’s currency declined for a third day before U.S. central bank officials including Atlanta Fed President Dennis Lockhart and Chicago Fed President Charles Evans are scheduled to speak on the economy this week. Chairman Ben S. Bernanke last week didn’t offer new details on how the Fed would undertake easing or give assurances the bank will act at its Nov. 2-3 meeting. The Aussie traded within two U.S. cents of parity before minutes of the Reserve Bank of Australia’s last meeting are released tomorrow.
“Markets appear to have priced in around $1 trillion in terms of quantitative easing from the Fed, so it’s difficult to see what is going to deliver further substantial U.S. dollar weakness,” said Mike Jones, a currency strategist at Bank of New Zealand Ltd. in Wellington. “We’ll probably see a deeper pullback in the Aussie.”
Australia’s currency fell to 98.70 U.S. cents as of 11:49 a.m. in Sydney from 99.07 cents in New York on Oct. 15, when it rose above $1. The currency slid to 80.28 yen from 80.69 yen.
New Zealand’s dollar declined 0.4 percent to 75.33 U.S. cents from last week. It weakened 0.5 percent to 61.28 yen.
Benchmark interest rates are 4.5 percent in Australia and 3 percent in New Zealand, compared with as low as zero in the U.S. and Japan, attracting investors to the South Pacific nations’ higher-yielding assets. The risk in such trades is that currency market moves will erase profits
Sumber : BLOOMBERG.COM