“The Australian dollar fell, erasing earlier gains, after growth in Chinese manufacturing trailed economists’ estimates, damping trade prospects.
The so-called kiwi touched the highest since August 2011 against its Australian counterpart afterReserve Bank of New Zealand Governor Graeme Wheeler said the smaller nation needs to reduce the budget deficit or face higher interest rates. The bank kept its benchmark borrowing cost at 2.5 percent yesterday.
“Chinese manufacturing data was not a disastrous result but definitely weaker than what the market was looking for,” saidJonathan Cavenagh, a currency strategist at Westpac Banking Corp. (WBC) in Singapore. “It would certainly take the shine off of Aussie dollar.”
Australia’s dollar declined 0.3 percent to $1.0392 at 4:27 p.m. in Sydney, after rising as much as 0.2 percent. The so- called Aussie bought 95.78 yen and touched 95.84, the highest since August 2008. Australia’s currency dropped to NZ$1.2350, the lowest since August 2011, before trading at NZ$1.2352, 0.6 percent below yesterday’s close.
The yield on Australia’s benchmark 10-year bonds rose seven basis points, or 0.07 percentage point, to 3.52 percent. The rate has climbed 20 basis points this week.
The kiwi advanced 0.3 percent to 84.14 U.S. cents from yesterday, when it gained 0.4 percent. The currency reached 77.58 yen, the highest since August 2008, before trading at 77.55, up 0.8 percent from yesterday’s close. Two-year interest- rate swaps in New Zealand rose 2 1/2 basis points to 2.92 percent.