The Australian dollar fell to a two-week low after China, the South Pacific nation’s largest trading partner, posted an unexpected trade deficit in February.
Australia’s currency declined versus all of its 16 major counterparts after employers unexpectedly cut workers in February, fueling speculation the central bank will delay raising interest rates. New Zealand’s dollar was close to the weakest level in five months after the nation’s Reserve Bank cut the benchmark rate and pledged to keep borrowing costs low.
“Combined with the weak job number earlier today, the China headline knocked the Aussie lower,” said Minoru Shioiri, chief manager of Mitsubishi UFJ Morgan Stanley Securities Co. in Tokyo. “The trade deficit from China was unexpected as it’s a big exporter country and thus is negative for the currencies tied to the growth.”
Australia’s dollar fell to $1.0035, the lowest since Feb. 24, before trading at $1.0053 as of 4:08 p.m. in Sydney from $1.0108 in New York yesterday. The currency declined 0.4 percent to 83.26 yen.
New Zealand’s dollar was at 73.55 U.S. cents from 73.66 cents yesterday, when it fell to 73.36 cents, the lowest since Oct. 1. The so-called kiwi bought 60.93 yen from 60.95 yen.
China reported a $7.3 billion trade deficit last month, the biggest in seven years, after the Lunar New Year holiday disrupted exports, according to the customs bureau.
China Trade Deficit: Today’s number compared with a $6.5 billion surplus in January. The median estimate in a Bloomberg News Survey of economists was for a $4.9 billion surplus. Outbound shipments rose an annual 2.4 percent, the slowest pace since November 2009, and imports climbed 19.4 percent.
The MSCI Asia Pacific Index of shares dropped 1.4 percent.
Australian employment fell by 10,100 from January, the statistics bureau said today in Sydney. Economists surveyed by Bloomberg forecast an increase of 20,000. The jobless rate was unchanged at 5 percent.
The RBA will raise its target rate by 27 basis points over the next 12 months, according to a Credit Suisse AG index based on swaps. A month ago, traders were betting on an increase of 41 basis points.
The decline in the Australian dollar was tempered before the China data as today’s report also showed the number of full- time jobs increased by 47,600, while part-time employment fell.
There was “a big shock response, heavy selling on the minus-10,000 headline,” said Sean Callow, a senior currency strategist at Westpac Banking Corp. in Sydney. “But within seconds people noticed that full-time employment had risen steeply. So there was a big split between full-time and part- time. That encouraged some buying back.”
Record Low Rate: New Zealand’s dollar fell after the Reserve Bank cut its key rate by half a percentage point to a record 2.5 percent level and pledged to hold borrowing costs low until rebuilding from the Christchurch earthquake revives the economy.
“A 50-basis-point cut was always the big risk,” said Mike Jones, a currency strategist at Bank of New Zealand Ltd. in Wellington. “We’re seeing an emergency response and that’s certainly, in the near-term, taking a toll on the currency, but I don’t think we’re going to see sustained declines.”
Central bank Governor Alan Bollard said in a statement that the cut to a 2.5 percent cash rate may “need to be removed once the rebuilding phase materializes.”New Zealand’s benchmark interest rate compares with 4.75 percent in Australia and as low as zero in the U.S. and Japan.