Aussie Dollar Falls After Trade Deficit Widens

“The Australian dollar fell for the first time in three days after the nation reported the biggest trade deficit in more than four years.

New Zealand’s dollar weakened after Asian equities slid by the most in two weeks, reducing demand for higher-yielding assets. Both nations’ dollars also weakened against the yen on speculation recent losses for Japan’s currency were excessive.

“The big trade deficit reported in Australia and lower equity markets are driving a risk-off sentiment,” said Joseph Capurso, a currency strategist in Sydney at Commonwealth Bank of Australia (CBA), the nation’s largest lender. “That’s pushing the Australian dollar lower.”

Australia’s currency fell 0.2 percent to $1.0478 as of 4:46 p.m. in Sydney and declined 0.6 percent to 91.70 yen. New Zealand’s dollar weakened 0.2 percent to 83.57 U.S. cents and 0.5 percent to 73.13 yen.

Australia’s imports outpaced exports by A$2.64 billion ($2.77 billion) in November, the biggesttrade shortfall since March 2008, from a revised A$2.44 billion deficit the prior month, data compiled by the statistics bureau showed today.

Traders see about a 60 percent chance the Reserve Bank of Australia will lower the benchmarkinterest rate from 3 percent this quarter, according to Bloomberg data on overnight index swaps. This compares with a less than 20 percent probability that New Zealand’s central bank will reduce borrowing costs from 2.5 percent….”

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