The Australian dollar retreated from its highest level in more than two years on speculation its recent gains were too rapid.
The so-called Aussie fell below 96 U.S. cents, paring its biggest monthly advance since May 2009, as the Standard & Poor’s 500 Index weakened yesterday on growing concern about the creditworthiness of nations including Ireland and Portugal. New Zealand’s dollar weakened against nine of its 16 most-traded counterparts as risk appetite faded with futures signaling equities in Australia and Japan will fall.
“It’s risk off basically, with both the euro and Aussie looking tired,” said Alex Sinton, a senior dealer in Auckland at ANZ National Bank Ltd., New Zealand’s largest lender. “The market is looking for further momentum to go higher and fresh buyers and there aren’t any around at this point.”
Australia’s currency retreated to 95.91 U.S. cents as of 9:08 a.m. in Sydney from 96.09 cents in New York yesterday, when it reached as high as 96.45 cents, the most since July 2008. It has risen 7.7 percent this month. The currency fell 0.2 percent to 80.86 yen. New Zealand’s dollar traded at 73.37 U.S. cents from 73.45 cents. It bought 61.84 yen from 61.92 yen.
Benchmark interest rates are 4.5 percent in Australia and 3 percent in New Zealand, compared with 0.1 percent in Japan and as low as zero in the U.S., attracting investors to the South Pacific nations’ higher-yielding assets. The risk in such trades is that currency market moves will erase profits.
The Australian dollar’s 14-day relative strength index against the greenback held for a third day above the 70 level that indicates a currency may reverse course after rising too rapidly. It may decline to 95.71 cents, said Sinton, while New Zealand’s dollar may fall toward 73.05 cents, he said.
To contact the reporter on this story: Candice Zachariahs in Sydney at czachariahs2@bloomberg.net
To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net.
http://jodnet.blogspot.com
The so-called Aussie fell below 96 U.S. cents, paring its biggest monthly advance since May 2009, as the Standard & Poor’s 500 Index weakened yesterday on growing concern about the creditworthiness of nations including Ireland and Portugal. New Zealand’s dollar weakened against nine of its 16 most-traded counterparts as risk appetite faded with futures signaling equities in Australia and Japan will fall.
“It’s risk off basically, with both the euro and Aussie looking tired,” said Alex Sinton, a senior dealer in Auckland at ANZ National Bank Ltd., New Zealand’s largest lender. “The market is looking for further momentum to go higher and fresh buyers and there aren’t any around at this point.”
Australia’s currency retreated to 95.91 U.S. cents as of 9:08 a.m. in Sydney from 96.09 cents in New York yesterday, when it reached as high as 96.45 cents, the most since July 2008. It has risen 7.7 percent this month. The currency fell 0.2 percent to 80.86 yen. New Zealand’s dollar traded at 73.37 U.S. cents from 73.45 cents. It bought 61.84 yen from 61.92 yen.
Benchmark interest rates are 4.5 percent in Australia and 3 percent in New Zealand, compared with 0.1 percent in Japan and as low as zero in the U.S., attracting investors to the South Pacific nations’ higher-yielding assets. The risk in such trades is that currency market moves will erase profits.
The Australian dollar’s 14-day relative strength index against the greenback held for a third day above the 70 level that indicates a currency may reverse course after rising too rapidly. It may decline to 95.71 cents, said Sinton, while New Zealand’s dollar may fall toward 73.05 cents, he said.
To contact the reporter on this story: Candice Zachariahs in Sydney at czachariahs2@bloomberg.net
To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net.
http://jodnet.blogspot.com
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