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Australian dollar slips on dismal business survey, NZ$ still buoyant

Credit: REUTERS/DAVID GRAY

The Australian dollar was knocked off a six-week peak on Tuesday by a dismal business survey showing the country's corporate sector was losing momentum, while New Zealand's kiwi hovered near a three-week top.

By Swati Pandey

SYDNEY, Sept 10 (Reuters) - The Australian dollar was knocked off a six-week peak on Tuesday by a dismal business survey showing the country's corporate sector was losing momentum, while New Zealand's kiwi hovered near a three-week top.

The Australian dollar AUD=D4 snapped a five-day winning streak to fall to $0.68505 from Monday's high of $0.68755 after a closely watched survey of business confidence deteriorated in August to below average levels.

National Australia Bank's NAB.AX index of business conditions fell 2 points to +1 in August, extending a slide from July. The survey's volatile measure of business confidence also declined, easing 3 points to +1.

The weak reading bolstered the case for more rate cuts after back-to-back policy easings by the Reserve Bank of Australia (RBA) in June and July to a record low of 1%. Financial futures 0#YIB: are fully pricing a third cut to 0.75% by December.

Kaixin Owyong, NAB economist, said the survey's headline figures "suggest a continued loss of momentum in private demand and no sign of the rebound in activity anticipated by the Reserve Bank."

NAB is reviewing its outlook for RBA interest rates, and will publish it on Wednesday.

Tuesday's figures contrast sharply with this week's data on Australia's residential property market, which points to a sharp upturn. Auction activity, home prices and mortgage lending have all soared in recent weeks.

Investors next will focus on a consumer sentiment survey due Wednesday which should show an uptick helped by a revival in home prices.

Across the Tasman Sea, the New Zealand dollar NZD=D4 was last at $0.6435, just a smidgen below Monday's high of $0.6444.

The kiwi has been on an uptrend since the start of this month helped by a weaker greenback amid wagers of sharper policy easing in the United States as policymakers look to offset the hit from the long, bitter Sino-U.S. trade war.

New Zealand government bonds 0#NZTSY= were sold off with yields about 5 basis points higher on the long-end of the curve.

Australian government bond futures pared some losses after hitting multi-week lows on Monday. The three-year bond contract YTTc1 was still down 3 ticks at 99.155 while 10-year contract YTCc1 was off 5.5 ticks at 98.19.

(Editing by Richard Borsuk)

((swati.pandey@thomsonreuters.com; +61 2 9321 8166; Reuters Messaging: swati.pandey.thomsonreuters.com@reuters.net; twitter.com/swatisays))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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