Australia’s dollar remained lower following its biggest slide in seven weeks amid speculation the Federal Reserve will taper stimulus, sapping the relative allure of higher-yielding currencies elsewhere.
The yield spread between Australia’s 10-year government notes and Treasuries was near the narrowest in more than four years before a private report today that may point to improvement in the U.S. job market. One-month implied volatility for the Aussie was almost at a one-year high ahead of data on Australia’s first-quarter gross domestic product. Demand for New Zealand’s kiwi dollar was limited after milk prices fell to a three-month low.
“The talk about U.S. quantitative easing possibly ending or being tapered — that’s really put downward pressure on the Aussie,” said Janu Chan, a Sydney-based economist at St. George Bank Ltd. “The risks to GDP are quite balanced,” she said, referring to the Aussie’s possible reaction.