Traders who placed record bets against the Australian dollar are ruing their timing, after the central bank signaled two years of interest-rate cuts are at an end and stepped back from efforts to talk down the currency.
The Australian dollar dropped below 87 U.S. cents for the first time since July 2010 after China’s bank regulator ordered regional offices to increase scrutiny of credit risks in the coal-mining industry, according to people with knowledge of the matter.
The dollar fell versus the euro and the yen after Federal Reserve Chairman Ben S. Bernanke said the central bank’s main interest rate will probably remain near zero for a “considerable time” after asset purchases end.
The euro retreated from an eight- month high versus the dollar before the European Central Bank meets today for the first time since President Mario Draghi said he’s ready to inject cash into the banking system.
The yen slid versus all its major counterparts as Asian stocks rose and the extra yield investors receive from U.S. securities climbed to the most in four months, damping the allure of Japan’s currency.
Traders are betting Australia’s dollar will extend its biggest decline in five years as policy makers flag that intervention to weaken the currency is an option, 30 years after they dropped exchange controls.
The Australian and New Zealand dollars dropped to the weakest this year against the greenback and the yen as concerns about the impact of the nuclear disaster in Japan spurred investors to sell riskier assets.