The Australian and New Zealand dollars dropped by the most this month as speculation mounted that their central banks will cut interest rates as soon as next month. Asian stocks outside of Japan retreated with oil as haven assets including the yen and U.S. Treasuries rose.
The Aussie retreated from near a two-month high reached Friday as the Reserve Bank of Australia said the jobs market was losing momentum amid weak inflation. The kiwi lost ground against all 31 major peers after Reserve Bank of New Zealand moved to rein in the nation’s housing boom, an obstacle to lowering borrowing costs. The MSCI Asia Pacific excluding Japan Index snapped a six-day winning streak as crude slipped to about $45 a barrel. Shares in Tokyo advanced as trading resumed after a holiday, while the yield on 10-year U.S. government debt fell from this month’s high.
Policy makers are under pressure to unleash stimulus as the global economic outlook shows signs of worsening. The International Monetary Fund is due to update its projections for world growth on Tuesday and Managing Director Christine Lagarde warned last week that estimates may be cut. Nonetheless, global equities have recovered to above where they were at the time of the U.K.’s vote to leave the European Union and the U.S. earnings season has so far delivered more positive surprises than negative ones.