New Zealand’s dollar dropped to the lowest in almost a month against its U.S. counterpart after China banned imports of milk powder from Auckland-based Fonterra Cooperative Group Ltd.
The Australian dollar slid to the lowest in almost three years against the greenback after an unexpected drop in the nation’s retail sales boosted odds for interest-rate cuts by the Reserve Bank, which meets on policy tomorrow. The yield on Australia’s one-year government note fell to a record low.
“Dairy exports are a big deal, and exports to China are a big deal for dairy exports,” said Imre Speizer, a markets strategist at Westpac Banking Corp. (WBC) in Auckland. “If China puts a ban on officially and it lasts for some significant period of time, you’ll probably see further negative reaction in the kiwi.”
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