“Australia’s dollar traded near its lowest in almost three years versus the greenback on speculation the Reserve Bank may cut interest rates as soon as next month.
The Aussie held a three-week drop before data this week forecast to show the job market stagnated in June. The South Pacific nation’s yield advantage over the U.S. is deteriorating as the Federal Reserve considers scaling back its quantitative easing program this year. New Zealand’s kiwi dollar rose after a report showed house prices gained last month.
“It’s inevitable that Aussie pushes lower,” said Robert Rennie, the chief currency strategist atWestpac Banking Corp. (WBC) in Sydney. “Lower rates are clearly required.”
The Australian dollar slid 0.2 percent to 90.51 U.S. cents as of 4:47 p.m. in Sydney from July 5. It reached 90.37 on July 3, the lowest since September 2010. New Zealand’s dollar climbed 0.2 percent to 77.24 U.S. cents, rebounding from a 1.6 percent slide on July 5.
The yield on Australia’s 10-year government bond rose eight basis points, or 0.08 percentage point, to 3.9 percent, after earlier touching 3.998 percent, the highest since June 24.
The top forecaster of the Australian dollar over the past year predicts a further slump, capping the worst annual loss since the 2008 global financial crisis. Canadian Imperial Bank of Commerce expects it to fall to 87 U.S. cents by Dec. 31, for a 16 percent decline this year. The median estimate of 53 economists surveyed by Bloomberg is 91 U.S. cents.
The Aussie’s depreciation so far this year “does provide some support to manufacturers, and exporters in particular, and that’s a good thing,” Australian Treasurer Chris Bowen said in an interview broadcast by Sky News yesterday. It’s dropped 13 percent this year. “The terms of trade have fallen since the budget. Against that, the Australian dollar has come down, so there’s a countervailing impact.”…”