Aussie Set for Fourth Weekly Drop on Taper Bets, RBA Speculation

 Australia’s dollar headed for a fourth weekly decline versus its U.S. peer as traders weighed the timing of a reduction in Federal Reserve stimulus that has buoyed asset prices around the world.

The Aussie fell for a fifth day in six yesterday after Fed Vice Chairman Janet Yellen said quantitative easing “will not continue indefinitely.” The currency traded within 0.5 percent of an eight-week low before the Reserve Bank of Australia releases minutes of its November meeting next week. Australia’s benchmark 10-year bond yield rose for a third week after touching the highest level in 20 months. New Zealand’s dollar was set for its first weekly advance in four.

“Tapering’s going to happen, and there’s a possibility, -- low as it might be -- that it will happen in December,” said Hans Kunnen, a senior economist at St. George Bank Ltd. in Sydney. “Medium term, Aussie is going lower.”

The Australian dollar slipped 0.1 percent to 93.10 U.S. cents as of 10:55 a.m. in Sydney from yesterday, when it dropped 0.5 percent. It has declined 0.8 percent this week, after touching 92.69 on Nov. 12, the lowest since Sept. 16.

New Zealand’s dollar was little changed at 82.73 U.S. cents, heading for a 0.2 percent weekly advance.

The yield on Australian 10-year government debt fell two basis points, or 0.02 percentage point, to 4.18 percent. It touched 4.3 percent on Nov. 13, the highest since March 2012. Yields have risen five basis points this week, adding to 16 basis point climb from Oct. 25 to yesterday.

(Source: Bloomberg)