Forex News – Australian Dollar Falls to 4-Year Low After Swiss Gold Decision

Australia’s dollar slid to a four-year low on speculation demand for the nation’s gold will wane after voters in Switzerland rejected a referendum to force the Swiss National Bank to hold more of the metal.

The Aussie and the New Zealand dollar fell against major counterparts before data forecast to show manufacturing slowed in China, the biggest trading partner of both South Pacific nations. The Reserve Bank of Australia sets policy tomorrow. Australia is the world’s largest gold producer after China.

“Gold is an important driver of the Aussie dollar,” said Raiko Shareef, a markets analyst at Bank of New Zealand Ltd. in Wellington. “Sentiment is quite fragile in Aussie right now given what’s happening in metals generally.”

Australia’s dollar dropped 0.8 percent to 84.37 U.S. cents as of 8:59 a.m. in Tokyo, after touching 84.27 cents, the least since July 2010. New Zealand’s currency slid 0.6 percent to 77.93 U.S. cents. The Aussie and kiwi fell for a third day.

The greenback rose 0.2 percent to 118.88 yen. It was little changed at $1.2436 per euro. The single currency added 0.1 percent to 147.82 yen. The Swiss franc weakened 0.3 percent to 96.79 centimes per dollar.

The “Save Our Swiss Gold” proposal stipulating the Swiss National Bank hold at least 20 percent of its balance sheet in gold and never sell any bullion was voted down by 77 percent to 23 percent, the government said. Polls had forecast the initiative’s rejection.

Source: Bloomberg (01 Dec 2014)