Aussie Falls as BlackRock Bearish; Dollar Gains Before China GDP
(Bloomberg) — The Australian dollar fell for a second day as BlackRock Inc. said it sees the currency slumping 15 percent this year, while the greenback strengthened as concerns China will report slowing growth enhanced the allure of U.S. assets.
The euro was little changed after gaining on Monday by the most in more than a week against the dollar amid speculation any additional stimulus measures announced by the European Central Bank at its Jan. 22 policy meeting will fall short of analyst forecasts. The Swiss franc was down more than 1 percent since Jan. 16 against all 16 of its major peers, trimming its surge in the wake of the central bank’s removal of the 1.20-per-euro floor. The Danish central bank said it wouldn’t follow Switzerland abandoning its currency peg after it cut interest rates on Monday.
“Today’s focus is Chinese data from December retail sales, industrial production to fourth-quarter” gross domestic product, Takeru Kurokawa, an analyst in Tokyo at Ueda Harlow Ltd., which provides margin-trading services, wrote in a note to clients. “Caution is needed for today’s Chinese data given that yesterday’s plunge in Shanghai shares triggered a fall in dollar-yen and cross-yen pairs on deteriorating risk sentiment.”
The Australian currency fell 0.3 percent to 81.91 U.S. cents as of 8:21 a.m. in Tokyo. The U.S. dollar advanced 0.2 percent to 117.74 yen and also strengthened versus the New Zealand and U.K. currencies. The euro was at $1.1603 after gaining 0.3 percent on Monday to $1.1606. The shared currency rose 0.1 percent to 136.61 yen.
Aussie Bear
The Aussie will tumble to 70 cents this year, driven down by slumping prices for the nation’s commodity exports, Stephen Miller, Sydney-based head of Australian fixed-income at the world’s biggest money manager, said yesterday by phone.
China, Australia’s biggest trading partner and the world’s biggest consumer of raw materials, may report today that its economy expanded 7.3 percent in 2014, the slowest full-year pace since 1990, according to economists surveyed by Bloomberg News.
“I’m probably inclined to think that things could be weaker rather than stronger,” Miller said in an interview last week before confirming his views on Monday. “Just as the massive increase in the terms of trade meant that, unlike the rest of the developed world, Australia avoided a recession, massive declines in the terms of trade mean that we’re going to struggle more than the developed world, and at the same time we’ve got Chinese growth coming off.”
The krone was little changed at 7.4328 per euro after the Danish central bank cut its deposit rate yesterday to minus 0.2 percent, matching a record low, from minus 0.05 percent and lowered its lending rate to a record 0.05 percent from 0.2 percent. Based on closing prices, it traded at the strongest since 2004 before the cut.
ECB Easing
ECB President Mario Draghi will announce a 550 billion-euro ($638 billion) bond-purchase program this week, according to 93 percent of respondents in a Bloomberg survey of economists. That tops the 500 billion euros in models presented to ECB officials this month.
“Market expectations now are stellar,” said Attilio Bertini, head of research at Credito Valtellinese SC in Sondrio, Italy. There must be “no disappointment.”
Citigroup Inc., Deutsche Bank AG and Barclays Plc, the three biggest currency traders in a Euromoney survey, lost money when the Swiss National Bank scrapped the euro cap on Jan. 15, according to people with knowledge of the companies, who asked not to be identified because the figures haven’t been made public. Retail foreign-exchange traders from New Zealand to New York said they were hurt by the currency’s moves.
Dollar Bulls
Data from the Commodity Futures Trading Commission shows that in the week ending Jan. 13, hedge funds and other speculators were the most bullish on the dollar against the euro since November and the most bullish on the currency against the pound since September 2013.
“The theme we are seeing is one of general risk reduction,” said Michael Sneyd, a currency strategist at BNP Paribas SA in London. “Investors generally lost money when the floor went. As a response we are seeing investors generally reducing risk in the FX market. Bullish dollar is the most prevalent theme, so as people reduce exposure it’s long-dollar trades, which are trimmed back the most.”
To contact the reporters on this story: Chikako Mogi in Tokyo at cmogi@bloomberg.net; Benjamin Purvis in Sydney at bpurvis@bloomberg.net To contact the editors responsible for this story: Garfield Reynolds at greynolds1@bloomberg.net Naoto Hosoda
