Australian Dollar Remains Low Prior to Business Investment Report

By TraderVox.com

Tradervox.com (Dublin) – The Aussie is still trading low against the dollar following its decline yesterday as speculation rose a report on capital expenditure growth will show a decline. This has dampened the outlook for the Australian currency as well as the country’s economy. The Australian dollar has dropped for the third day against the yen as the market boosted bets the Reserve Bank of Australia will lower its interest rates when they meet on December 4. The demand for the New Zealand dollar was limited after Graeme Wheeler, the Reserve Bank of New Zealand Governor, indicated that the strong currency is hurting the nation’s economy. The two south pacific currencies remained lower as the Asian stocks dropped; however, they were supported by reports from China indicating that the nation’s trade will have improved by the second quarter of 2013.

According to Adrew Salter, who is a currency strategist at ANZ Banking Group Ltd in Sydney, the non-mining capital investment improvements next year will determine whether there is need for policy makers to establish lower interest rates. Australian 10-year benchmark bond yields dropped by 8 basis points to 3.21 percent while the New Zealand two year swap rate declined by one and a half basis points to 2.605 percent. The Australian dollar dropped as the MSCI Asia Pacific Index of shares dropped by 0.6 percent yesterday.

The market is expecting a report on business investment from Statistics bureau to show a rise of two percent in the third quarter, which is a slower pace that the 3.4 percent registered in the previous quarter. Data published yesterday indicated that the construction work in Australia improved by 1.7 percent in the third quarter; after a revised report indicated that it increased by 0.9 percent in the second quarter.

The Australian dollar bought $1.0447 at the close of trading in Sydney yesterday after it declined by 0.2 percent the previous day to trade at 1.0446. The Aussie dropped by 0.4 percent against the yen to trade at 85.50 yen. The New Zealand currency was trading at 82.10 US Cents and dropped by 0.3 percent against the yen to exchange at 67.19.

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