Australian Dollar Weakens After Company Profits Unexpectedly Declined

Australia’s dollar fell, snapping a three-day gain versus the greenback, after China’s premier Wen Jiabao lowered the Asian nation’s economic-growth forecasts.
The so-called Aussie depreciated against all of its major counterparts as traders reduced their prediction on how much the Reserve Bank of Australia will raise borrowing costs over the next 12 months. Losses in the New Zealand dollar were tempered after the government announced the nation’s first trade surplus in seven months.
China’s plan “should be seen as negative for the Aussie in the near term,” said Khoon Goh, head of market economics and strategy at ANZ National Bank Ltd. in Wellington. “The Australian currency has benefited from strong growth in China. The Aussie has been seen as a good China proxy play.”
Australia’s dollar declined to $1.0146 as of 10:42 a.m. in Sydney from $1.0177 in New York last week. The currency slipped 0.3 percent to 82.90 yen. New Zealand’s dollar traded at 75.19 U.S. cents from 75.16 cents, and was at 61.44 yen from 61.39 yen.
China’s government set an annual economic expansion target of 7 percent for the 12th five-year plan period, which covers 2011 through 2015, Wen said in response to questions yesterday on the website of the official Xinhua News Agency. China’s target was 7.5 percent for the period from 2006 through 2010, with actual growth surpassing that each year.
The RBA will raise its target rate by 25 basis points over the next 12 months, according to a Credit Suisse Group AG index shows. A week ago, the prediction was for an increase of 31 basis points.
New Zealand had a trade surplus of NZ$11 million ($8.27 million) in January, the statistics agency said in Wellington. Exports totaled NZ$3.29 billion, and imports were NZ$3.28 billion, it said.
The magnitude 6.3 earthquake that struck the Pacific nation’s second-largest city, Christchurch, on Feb. 22 will cut gross domestic product by at least half a percentage point, ANZ National Bank said.