The Australian dollar retreated as Asian shares fell and ahead of Chinese data that may add to the case for Asia?s biggest economy to take more tightening measures.
The so-called Aussie weakened versus 12 of its 16 major counterparts as economists said reports today will show China?s consumer price index, retail sales and industrial production expanded at a faster pace in September. The currency remained within two U.S. cents of parity on speculation the Federal Reserve will inject more money into the world?s largest economy, debasing the greenback.
?The Australian dollar could be quite sensitive to which of the numbers comes in weaker or stronger than expected today,? said Ray Attrill, global research director at Forecast Ltd. in Sydney. ?A strong CPI number has some potential to spark some more risk averse moves because it means China suddenly is worried that its inflation problem is getting bigger.?
Australia?s dollar traded at 98.55 U.S. cents as of 12:02 p.m. in Sydney from 98.71 cents in New York yesterday. It climbed to $1.0004 on Oct. 15, the highest since the currency was freely floated in 1983. The Aussie was at 79.92 yen from 80.04 yen, after rising to 81.83 yen on Oct. 7, the strongest since May 17.
New Zealand?s dollar bought 75.31 U.S. cents from 75.50 cents, and was at 61.07 yen from 61.22 yen.
The MSCI Asia Pacific Index slipped 0.2 percent today, while Japan?s Nikkei 225 Stock Average lost 0.3 percent.
Fed Speculation
The Standard & Poor?s 500 Index rose 1.1 percent yesterday on speculation the Fed will take more credit-easing measures to support growth. A Fed regional survey showed the U.S. economy grew at a ?modest pace? in September and early October with little sign of accelerating and companies still hesitant to hire.
?For the next two weeks, it?s all about the Fed because the reality is they?re printing money and they?re targeting the U.S. dollar,? said Adam Carr, a senior economist at ICAP Australia Ltd. in Sydney. ?We could see the Aussie dollar bounce over parity and maybe hold there for a good portion of next year, depending on what the Fed does.?
The consumer price index in China, Australia?s biggest trade partner, increased 3.6 percent in September from the year before, according to the median estimate of economists. The gauge expanded by 3.5 percent in August. The nation?s gross domestic product expanded 9.5 percent in the third quarter from a year ago after growing 10.3 percent in the second quarter, according a separate survey.
China increased its benchmark lending and deposit rates on Oct. 19 after inflation accelerated to the fastest pace in 22 months. The one-year deposit rate will climb to 2.5 percent from 2.25 percent, the People?s Bank of China said on its website.
To contact the reporters on this story: Ron Harui in Singapore at rharui@bloomberg.net; Monami Yui in Tokyo at myui1@bloomberg.net.
To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net.
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