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Australia dlr dented by dire business data, NZ dlr steady

Published 26/11/2015, 12:40 pm
© Reuters.  Australia dlr dented by dire business data, NZ dlr steady
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By Cecile Lefort and Rebecca Howard

SYDNEY/WELLINGTON, Nov 26 (Reuters) - The Australian dollar lost ground on Thursday after surprisingly weak investment data dealt a blow to the economic growth outlook, while the New Zealand dollar was steady in thin Thanksgiving trade.

The Australian dollar dropped to $0.7215, from $0.7255 before the dire data and away from a one-month peak of $0.7283 touched on Wednesday. Support was found around 72 cents.

The Aussie felt the heat across the board, falling around 0.5 percent against the yen. It even skidded against the euro which rose to A$1.4694, from a five-month trough of A$1.4577 on Wednesday.

The common currency has been battered on the prospect of further policy stimulus from the European Central Bank to support the economy. The euro has shed 4.6 percent this month.

Much of the Aussie weakness came after data showed business investment plunged a record 9.2 percent last quarter, a surprisingly sharp blow to economic growth.

Gross domestic product data is due on Dec. 2.

"With commodity prices falling again, the clear danger is that at some point the Reserve Bank of Australia (RBA) will have to conclude that the outlook for investment is worse than it thought," said Paul Dales, chief Australia and New Zealand economist at Capital Economics, seeing an interest rate early next year.

Interbank futures 0#YIB: were little changed as the market still sees scant chance of a cut in rates for the next couple of months. The market prices a 30 percent chance of an easing by March.

Across the Tasman sea, the New Zealand dollar NZD=D4 was largely unchanged at $0.6577, having shrugged off October trade data that was mostly in line with expectations.

Wellington-based BNZ Senior Market Strategist Kymberly Martin said any news flow that undermines risk appetite would likely take a direct toll on the "risk sensitive" New Zealand dollar.

New Zealand government bonds gained slightly, with yields 3 basis point lower across the curve.

Australian government bond futures extended gains, with the three-year bond contract up 4 ticks at 97.930. The 10-year contract rose 3.5 ticks to 97.1300, while the 20-year contract was 4.5 ticks higher at 96.6150. (Editing by Sam Holmes)

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