Australian and N.Z. Dollars Fall as U.S. Rate Cut Bets Trimmed(页 1) - 房地产贷款投资专区 -

Australian and N.Z. Dollars Fall as U.S. Rate Cut Bets Trimmed

Oct. 4 (Bloomberg) -- The Australian dollar fell from near an 18-year high and New Zealand's currency slid on speculation the Federal Reserve will delay cutting its benchmark interest rate, reducing the appeal of higher-yielding debt markets.

Both currencies declined after reports yesterday showed signs of strength in U.S. service industries and employment, causing traders to reduce bets the Fed will cut rates on Oct. 31. The Indonesian rupiah, South Korean won and Malaysian ringgit also declined versus the U.S. dollar.

``The Australian and New Zealand dollars may well fall further,'' said Alex Sinton, a currency trader at ANZ National Bank Ltd. in Auckland. ``The figures helped the U.S. dollar break out of its recent down trend.''

The Australian dollar fell 0.7 percent to 88.26 U.S. cents at 4:28 p.m. in Sydney from 88.87 cents late in Asia yesterday. It touched 89.50 on Oct. 2, the strongest since February 1989, driven by the 1.75 percentage point premium for the Reserve Bank of Australia's benchmark rate over that of the Fed.

The New Zealand dollar slumped 1 percent to 75.41 U.S. cents, the biggest decline of the 16 most-active currencies. It reached 76.70 cents Oct. 2, the highest since Aug. 9. New Zealand's central bank rate is 3.5 points higher than that of the Fed.

Australia's dollar may weaken below 87.90 cents and New Zealand's under 74.70 cents this week, Sinton forecast.

The rupiah fell 0.2 percent to 9,140, the won slipped 0.4 percent to 917.50 per dollar and the ringgit fell 0.4 percent to 3.4240.

Rates, Economies

Australia's 6.5 percent benchmark lending rate is one of the highest among Aaa-rated countries and New Zealand's 8.25 percent rate is second only to Iceland's.

The yield on the Australian government two-year bond rose 2 basis points to 6.52 percent, the highest in almost four months. New Zealand's equivalent benchmark yield was little changed at 6.97 percent. A basis point is 0.01 percentage point.

The yield advantage of Australia's two-year bond over equivalent Treasuries gained to 2.51 percentage points, the widest since October 2004. New Zealand's similar yield advantage is 2.95 percentage points and reached a 2 1/2-year high of 3.36 percentage point on Aug. 3.

Rate Outlook

Losses in the Australian dollar may be limited before an inflation report on Oct. 24 that might determine whether the Reserve Bank of Australia will raise rates next month. Australia's dollar jumped yesterday after a report showed retail sales in August grew twice as fast as economists expected, encouraging traders added to bet on a rate increase.

The decline of New Zealand's currency may also be curbed by speculation the nation's central bank won't cut borrowing costs. A report last month showed economic growth slowed less than economists expected. Retail sales and consumer price reports this month may indicate whether four rate increases this year have slowed growth and inflation.

The Australian dollar has jumped 6.9 percent and New Zealand's climbed 8 percent the past month, boosted by the Fed's decision on Sept. 18 to cut its target for overnight lending between banks by a half-percentage point to 4.75 percent.

Interest-rate futures show traders see a 70 percent chance the Fed will cut the overnight lending rate to 4.5 percent at their next meeting. The likelihood was 88 percent a week ago. Companies in the U.S. added more jobs in September, ADP Employer Services said yesterday. U.S. service industries continued to grow in September, the Institute for Supply Management said.

The reports ``call into question the doom and gloom scenario where the Fed has to cut again,'' said Win Thin, currency strategist at Brown Brothers Harriman & Co. in New York. Speculation the Fed will delay another ``rate cut helped the dollar at the expense of other currencies, like New Zealand's.''

Taking `Risk Off'

The Labor Department will probably tomorrow say that U.S. employers added 100,000 jobs in September after reducing positions by 4,000 the previous month, according to a Bloomberg survey of economists.

``People are taking some risk off the table in case non- farm payrolls surprise on the upside,'' said David Forrester, Australian and New Zealand currency economist at Barclays Capital in Singapore. ``That's what's driving'' currencies.

The currencies also slid against the yen as a drop in regional stocks prompted fund managers to pare investments in higher returning assets using loans from Japan. The Morgan Stanley Capital International Asia Pacific Index of regional equities lost 1.1 percent to 164.95.

Australia's dollar dropped 0.6 percent to 102.70 yen from 103.30 yen late in Asia yesterday. New Zealand's dollar declined 1 percent to 87.71 yen from 88.57.

Volatility Rises

Both currencies also fell as a measure of their volatility increased. That may discourage carry trades, in which investors get funds in a country with low borrowing costs and invest in one with higher interest rates. The risk is that currency moves erase their profits.

One-month implied volatility on options on Australia's currency was at 13 percent compared with 11.55 percent at the start of the week. New Zealand's equivalent was at 15 percent, rising from 14 percent on Sept. 28.

The Australian dollar will decline to 84 cents by year-end, according to the median estimate of 40 strategists surveyed by Bloomberg. The New Zealand dollar will trade at 72 cents by the end of 2007, a separate survey shows.