“Australia’s dollar reached a more than three-month low as traders increased bets on how much the nation’s central bank will cut benchmark rates, damping demand for the country’s assets.
The so-called Aussie weakened after the Reserve Bank of Australia lowered on Feb. 8 its forecasts for inflation and growth, citing a soft labor market and high currency. It remained lower after dropping yesterday against New Zealand’s dollar as reports in the smaller economy showed new house prices and spending on electronic cards rose.
“The RBA has trimmed inflation and growth forecasts so that puts us in line for at least one or two more rate cuts in the next few months,” said David Greene, a senior corporate currency dealer at Western Union Business Solutions, a global payment services network. “Domestic weakness and lack of flow from a fairly worried offshore market are keeping the Aussie weak.”
Australia’s dollar touched $1.0241, the least since Oct. 23, before trading at $1.0255 as of 4:42 p.m. in Sydney from $1.0256 yesterday, when it dropped 0.6 percent. It slid to 96.33 yen after climbing 1.2 percent to 96.73 yen in New York. It fell 0.1 percent to NZ$1.2266 after declining 0.6 percent yesterday.
New Zealand’s currency traded at 83.64 U.S. cents from 83.53 and declined 0.3 percent to 78.54 yen.
Traders estimate Australia’s Reserve Bank will cut its key rate by 0.49 percentage point over 12 months from the 3 percent rate now, according to a Credit Suisse AG index based on overnight indexed swaps. The gauge showed expectations for 33 basis points of reductions on Feb. 4.
The yield on Australia’s 10-year government bond was little changed at 3.46 percent.
