AUD 01 (May 08 - Feb 12)

[Blackjack]

Australian Dollar Falls This Week on Rates, N.Z. Dollar Rises
By Lilian Karunungan and Candice Zachariahs

Aug. 15 (Bloomberg) -- The Australian dollar fell, taking its loss from a 25-year high reached a month ago to 12 percent, as prices of commodities slid and traders bet on lower interest rates. The New Zealand dollar posted its first rise in five weeks.

The Australian currency posted its fourth weekly decline, the longest losing streak since October 2006, as gold, the nation's third most-valuable raw material export, slumped 8 percent. New Zealand's dollar traded at a 12-month low against the U.S. dollar and the weakest in almost two years versus the yen this week as concern that global economic growth will slow spurred investors to sell higher-yielding assets.

``The pressure will be on the downside'' for the Australian and New Zealand dollars, said Brian Redican, senior market economist at Macquarie Group Ltd. in Sydney. ``Commodity prices have pulled down from their peaks and also their central banks are now cutting interest rates.''

Australia's dollar fell 0.7 percent to 86.62 U.S. cents at 5 p.m. in New York from 87.22 cents yesterday, and 88.87 cents a week ago. It dropped to 85.93 cents on Aug. 13, the weakest since Jan. 23.

The currency fell to 95.74 yen from 95.71 yen yesterday. It has slipped 2.3 percent this week, its fourth weekly decline.

New Zealand's dollar rose 0.9 percent to 70.62 U.S. cents in New York, from 70 cents yesterday and 70.43 a week ago. It touched 68.25 cents on Aug. 13, the lowest since Aug. 17, 2007. The currency has risen 0.3 percent this week.

The kiwi, as the New Zealand currency is known, bought 78.06 yen, from 76.82 yen yesterday. It gained 0.6 percent this week.

Interest-Rate Bets

The Australian dollar, or Aussie, is the worst performer among the 16 most-traded currencies in the past month and has fallen from a 25-year high of 98.49 cents touched July 16 as investors began to bet on lower borrowing costs.

Reserve Bank of Australia Deputy Governor Ric Battellino said yesterday the central bank ``is in a position to consider'' cutting interest rates even before inflation slows.

``With the RBA reinforcing market expectations that they are likely to start lowering the official cash rate as soon as September, we remain bearish,'' Deutsche Bank AG currency strategists including London-based Bilal Hafeez and Sydney-based John Horner, wrote in a research note yesterday. ``We continue to target a fall to 85 cents on this move.''

Traders are betting the RBA will lower its benchmark rate of 7.25 percent by 1.1 percentage points over the next 12 months, according to a Credit Suisse Group index based on interest-rate swaps. A month ago they were betting on no change.

Forecast Change

Goldman Sachs Group Inc. revised its forecast for the Australian and New Zealand dollars, saying they faced challenges on the ``domestic front from slowing activity.'' The firm now expects the Australian currency to buy 86 cents in three months, compared with a pervious forecast of 96 cents, and the New Zealand currency to trade at 68 cents compared with an earlier forecast of 73 cents.

Australia's dollar has fallen 8.1 percent versus the dollar through August as the UBS Bloomberg Constant Maturity Commodity Index of 26 raw materials dropped 8.2 percent.

The New Zealand dollar pared it losses over the past month versus the U.S. dollar to 8.7 percent as investors speculated the currency's sell-off had been overdone. The kiwi has weakened for four of the past five weeks.

``The New Zealand dollar has been affected by the momentum of the carry trade,'' said Alex Sinton, a senior currency trader at ANZ National Bank Ltd. in Auckland. ``Economically there are still factors that weigh on the kiwi.''

Carry Trades

The Reserve Bank of New Zealand reduced borrowing costs to 8 percent on July 24 and signaled more cuts ahead. The Treasury Department said Aug. 4 the nation probably contracted in the second quarter, pushing New Zealand into its first recession in a decade.

New Zealand's benchmark interest rate compares with 2 percent in the U.S. and 0.5 percent in Japan, making its currency a favorite target for carry trades.

In carry trades, investors get funds in a country with low borrowing costs and invest in one with higher interest rates, earning the spread between the rates. The risk is that currency market moves can erase those profits.

Australia's 10-year government bonds gained for a ninth week, the longest winning run in a year. The yield on the benchmark note dropped 7 basis points from last week, or 0.07 percentage point, to 5.84 percent. The price of the 5.25 percent security due March 2019 rose 0.540, or A$5.40 per A$1,000 face amount, to 95.4.

http://www.bloomberg.com/apps/news?pid=20601081&sid=aPUTEKaCWMF8&refer=australia

[Blackjack]

Australia, New Zealand Dollars Log Monthly Drop on Rate Outlook

Aug. 29 (Bloomberg) -- The Australian dollar headed for its biggest monthly loss in 22 years, on speculation the nation's interest-rate advantage over the U.S. will narrow. New Zealand's dollar was poised for a third monthly loss.

The currencies weakened after a government report showed yesterday the U.S. economy grew faster than economists expected in the second quarter. Australia's dollar, known as the Aussie, is the worst performer of the 16 most-traded currencies in August as traders bet the central bank will lower interest rates next week for the first time in seven years and the yield premium of the nation's bonds shrank.

``The central bank is on a dovish stance and has left the door open for future rate cuts,'' said Craig Chan, a currency strategist at Lehman Brothers Holdings Inc. in Singapore. ``There's been a shift in expectations and the Aussie dollar is looking very overvalued.''

The Australian dollar declined to 86.19 U.S. cents as of 4:50 p.m. in Sydney, compared with 86.65 cents in late Asian trading yesterday and 94.23 cents at the end of July for an 8.7 percent monthly decline, the most since July 1986.

New Zealand's currency, know as the kiwi, bought 70.31 U.S. cents from 70.49 cents yesterday and 73.43 at the end of July.

`Difficult' Conditions

The Australian currency fell today after separate reports showed sales of newly built homes declined last month to the lowest since November 2006 and lending to Australian consumers and businesses rose at the slowest annual pace in six years in July, reinforcing the central bank's view that the economy is cooling enough to cut borrowing costs.

Australian Prime Minister Kevin Rudd said today the economy faces ``difficult'' conditions and will pick up in 2009.

Australia's dollar has tumbled 12 percent since reaching a 25-year high of 98.49 cents on July 16. Policy makers said they may cut rates soon to avoid a ``deeper and more persistent'' economic slowdown, according to minutes of this month's rate meeting released Aug. 19. The currency has also weakened as the prices of commodities the country exports slumped on concern global growth is slowing.

Australia's benchmark borrowing cost is 7.25 percent, New Zealand's 8 percent while the U.S. Federal Reserve's target is 2 percent. Traders expect the Reserve Bank of Australia to cut rates by a quarter-percentage point on Sept. 2 and lower the benchmark to at least 6.25 percent in the next year, according to Credit Suisse Group indexes based on interest-rate swaps.

The Reserve Bank of New Zealand, which cut the rate by a quarter-percentage point on July 24, will lower borrowing costs to at least 6.75 percent within a year, a similar index shows.

New Zealand Dollar

New Zealand's dollar had its longest monthly losing streak in three years after a U.S. government report showed a 3.3 percent annualized increase in gross domestic product from April through June that was higher than previously estimated. New Zealand's $104 billion economy probably contracted in the first two quarters, the Treasury Department said this month.

Investors also bought U.S. assets after Nationwide Building Society said house prices in Britain fell this month at the fastest annual pace in almost 20 years, and Bank of England policy maker David Blanchflower said U.K. interest rates need to decline to help the economy out of a recession.

``A rebound in the U.S. dollar amid a mix of strong GDP and dovish comments from the Bank of England, knocked the New Zealand dollar back,'' said Danica Hampton, a currency strategist at Bank of New Zealand Ltd. in Wellington. ``We can't help but think the U.S. dollar will come off looking the best of a bad bunch.''

Australian 10-year government bonds advanced this week, pushing the yield down 3 basis points to 5.76 percent. The price of the 5.25 percent bond maturing in March 2019 gained 0.256, or A$2.56 per A$1,000 face amount, to 96.017. The yield was 6.22 percent at the end of last month.

New Zealand's benchmark 10-year bond yield fell 2 basis points to 5.99 percent. It has fallen 14 basis points this month. A basis point is 0.01 percentage point.

http://www.bloomberg.com/apps/news?pid=20601081&sid=aLP.yHtJ.a94&refer=australia

[winston]

From DBS:-

AUD a casualty of weak commodity prices and USD strength

– Stocks affected are Allco REIT, Tat Hong and SingTel

[winston]

The slide of the Australian dollar will hit Singapore companies with Aussie exposure, including Singapore Telecommunications , Singapore's biggest firm by stock market value.

Other companies with Australian dollar exposure include transport operator ComfortDelGro , Singapore Power, property company CapitaLand , crane operator Tat Hong , and systems integrator CSE Global .

[kennynah]

sing and tel's optus surely generates revenue in kangeroo money

[winston]

Currencies including the South African rand, the Mexican peso and Australia's dollar are undervalued by more than 20 percent based on inflation, productivity and terms of trade, Goldman Sachs Group Inc. said.

The three have been the worst performers of the 16 most-active currencies against the greenback over the past month, falling 21 percent, 18 percent and 16 percent respectively as equity markets and commodity prices tumbled amid a global credit crisis.

The currencies "offer considerable value from a medium-term perspective," Jens Nordvig, a Goldman strategist in New York, wrote in a research note dated [Monday].

– Bloomberg

[winston]

IT'S TIME TO BOOK THAT TRIP TO AUSTRALIA by Brian Hunt

Today's column offers a rare "travel tip" to our readers... pack your bags for Australia!

Our "tip" comes down to purchasing power. You see, for much of the past six years, the Australian dollar was one of the world's strongest currencies. Australia's economy is dependent on commodity exports... so soaring gold, copper, oil, and uranium prices gave a huge boost to the country's prosperity, profits, and real estate. The Aussie dollar followed suit and almost doubled in value against other currencies from 2002 to 2008.

The strong Aussie dollar was fantastic for natives. Their dollars simply grew and grew in value for years. On the other hand, it was awful for Americans who wanted to go see kangaroos... The strengthening Aussie dollar vastly increased the U.S. dollar cost of a vacation.

But the past few months have been a classic "live by the sword, die by the sword" story for Australia. Commodities have had one of their worst quarters in history. The Aussie dollar has plummeted 30%... a colossal move for a developed country's currency. As you can see from today's chart, the Aussie dollar hasn't been this cheap since 2003... and "all things Australian" are on sale. Make sure to have a Vic Bitter and think of us.

[kennynah]

visit crocodile dundee ??? no thank you...

[HengHeng]

personally i thnk more to come ... still alot of rate points to cut

[blid2def]

At least they got a lot more room to play... 6+% now isn't it? (sidenote: knn my Aus$ now have to wait 10 years to break even hahaha). Better than US... cut until not much room left liao. Cut some more, got to pay money to deposit in bank instead.