Australian, N.Z. Dollars Fall Before U.S. Stimulus Package Vote

By Patricia Lui and Garfield Reynolds

Feb. 9 (Bloomberg) -- The Australian and New Zealand dollars fell, reversing a gain, on speculation traders scaled back expectations the U.S. Congress will pass President Barack Obama’s economic stimulus package.

The currencies snapped a two-day advance as a delay in the announcement of U.S. Treasury Secretary Timothy Geithner’s bank rescue-plans also damped demand for higher-yielding assets. Japanese machinery orders declined for a third month, increasing the odds of a prolonged recession in one of Australia’s biggest trading partners.

“The market is taking back some gains on concerns that it may have gotten ahead of itself over the U.S. stimulus package,” said David Forrester, currency economist at Barclays Capital in Singapore. “The market is also a little nervous over the delay in Geithner’s bank rescue measure announcement.”

The Australian dollar dropped 1.7 percent to 66.36 U.S. cents as of 5:17 p.m. in Sydney from 67.49 cents late on Feb. 6 in New York. It weakened 2.7 percent to 60.40 yen. The New Zealand dollar slid 1.2 percent to 52.56 U.S. cents and declined 2.1 percent to 47.84 yen.

The U.S. Senate votes on the $780 billion economic-stimulus package today and officials will be consulting with senators throughout the day, the Treasury said in an e-mailed statement. Geithner has postponed to tomorrow his unveiling of the administration’s plan to shore up the financial industry as officials focus on getting approval for their separate economic stimulus plan in the Senate, the Treasury said.

Machine Orders

Japanese orders for machinery fell 1.7 percent in December from the previous month, when they dropped 16.2 percent, the Cabinet Office said today in Tokyo. Japan’s current-account surplus narrowed 92 percent in December as exports slumped, the Finance Ministry also said today.

“The machinery orders surprised a little bit to the upside although the trade balance is a little worse than expected and that’s adding to the bad news on the global economic scenario,” Forrester said. “The economic data is saying yes, things are bad. But foreign exchange markets will be focused on policy initiatives to see how long we will be in this global downturn.”

Australia’s worst wildfires on record probably won’t have any lasting impact on the Australian dollar, said Tony Morriss, a senior markets strategist at Australia & New Zealand Banking Group Ltd. in Sydney.

Worst Bush Fire

The wildfires left at least 108 people dead and may burn for days as winds fan flames across southern Victoria state, authorities said today. More than 300,000 hectares (741,316 acres) have been burnt and 750 homes destroyed with five large blazes still being fought today, the state’s Country Fire Authority said.

“The immediate concern for the financial sector is the insurance costs,” Morriss said. “There are also some concerns about the impact on agriculture but this has been rather small. The Australian dollar should be supported around 66 U.S. cents for the next couple of days.”

Australian government bonds rose, ending a four-day loss. The yield on the 10-year note slid eight basis points, or 0.08 percentage point, to 4.36 percent, according to data compiled by Bloomberg. The price of the 5.25 percent security due March 2019 rose 0.71 to 107.20.

New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, rose to 3.49 percent from 3.39 percent on Feb. 6.

To contact the reporter on this story: Patricia Lui in Singapore at plui4@bloomberg.net; Garfield Reynolds in Sydney at greynolds1@bloomberg.net.