“Australia’s dollar fell after data showed retail sales unexpectedly contracted in March, adding to speculation a weakening economy will prompt the central bank to cut interest rates to a record low.
The so-called Aussie dropped to its weakest since October 2009 versus New Zealand’s dollar amid prospects monetary policy will diverge in the two nations over the coming year. There is a 53 percent chance that the Reserve Bank will lower its 3 benchmark rate tomorrow, according to Bloomberg calculations based on overnight-index swap rates.
“The Aussie will remain heavy and probably gravitate toward the downside following the retail sales number,” said Jim Vrondas, the Sydney-based chief currency and payment strategist at OzForex Ltd. “The RBA is unlikely to cut tomorrow, though they’ll probably maintain an easing bias. That should give the Aussie some support.”
The Australian dollar declined 0.5 percent to $1.0271 as of 5:4 p.m. in Sydney. It fell 0.1 percent to 102.03 yen. The Aussie slid to as low as NZ$1.2016, the weakest since October 2009, before buying NZ$1.2034, 0.5 percent lower than the May 3 close. New Zealand’s dollar rose 0.1 percent to 85.41 U.S. cents. The currency advanced 0.5 percent to 84.85 yen.
