Australia’s dollar dropped to a two-week low as the nation’s central bank May meeting minutes signaled it was likely to maintain record-low interest rates.
The Aussie fell against 15 of its 16 major counterparts after the Reserve Bank of Australia predicted spare capacity in labor markets will endure and iron ore, the nation’s biggest export earner, dropped below $100 a ton. The euro slid to a three-month low versus the yen before European Central Bank officials speak in Frankfurt and Helsinki, amid speculation they will ease monetary policy next month. The yen weakened versus most of its major peers as the Bank of Japan began a two-day meeting amid forecasts it will maintain monetary stimulus.
“Generally risk is on the defensive a little bit,” Vassili Serebriakov, a New York-based foreign-exchange strategist at BNP Paribas SA, said by phone. “Commodity currencies are doing badly. A little bit of a carry unwind going on probably, where Aussie, kiwi, Canadian dollar all down.”
Australia’s dollar fell 0.8 percent to 92.56 U.S. cents at 10:08 a.m. New York time, after declining to 92.51 cents, the lowest level since May 2.
The euro(FOREX:EURUSD) dropped 0.3 percent to 138.74 yen after falling to 138.55, the weakest level since Feb. 7. The 18-nation common currency slipped 0.1 percent to $1.3702. The dollar fell 0.3 percent to 101.24 yen after reaching 101.10 yesterday, the least since Feb. 5.
An equally weighted basket of the so-called commodity currencies, those of Canada(FOREX:CADUSD), Australia(FOREX:AUDUSD) and New Zealand(FOREX:NZDUSD), fell to 96.3 versus the U.S. dollar, the lowest level since May 1.
Inflation in Australia is contained and the economy is adjusting to fewer resource projects, the RBA said.
“The board noted that overall growth in coming quarters was likely to be below trend given expected slower growth in exports, the decline in mining investment and the planned fiscal consolidation,” according to the minutes of the central bank’s May 6 meeting, when it kept the cash rate unchanged at 2.5 percent. “The current accommodative stance of policy was likely to be appropriate for some time yet.”
Iron ore extended declines to the lowest since 2012, after dropping below $100 a ton yesterday, on speculation a slowing Chinese property market will crimp demand for the raw material to make steel.