RTTNews - During Asian deals on Monday, the Australian and New Zealand dollars declined to new multi-day lows against their U.S. and Japanese counterparts as the weakness in Asian stock markets reduced demand for higher-yielding currencies.

Asian stock markets are trading weak today, with investors picking up cues from Wall Street where stock prices had ended sharply lower in lackluster trading last Friday.

Besides weak Wall Street cues, concerns over a sharp drop in earnings, the spread of the swine flu, lower crude oil prices and a stronger yen are also contributing to the sell-off on the Asian stock exchanges today.

Shares of consumer electronics maker Panasonic Corp. fell more than 8% following an announcement from the company that it is likely to book a group net loss of 195 billion yen in the year ending March. In fiscal 2008, the company had logged a group net loss of 378.9 billion yen.

Giving up early gains, Wall Street ended on a weak note Friday as investors pressed sales on concerns over a possible drop in energy demand. None too impressive economic data and auto major General Motors' plan to significantly reduce its dealers network also contributed to the weak close.

The major averages all finished the day firmly in negative territory after ending the previous session notably higher. The Dow closed down 62.68 points or 0.8 percent at 8,268.64, the Nasdaq closed down 9.07 points or 0.5 percent at 1,680.14 and the S&P 500 closed down 10.19 points or 1.1 percent at 882.88.

Against the US dollar, the Australian currency declined to 0.7454 during early Asian deals on Monday. This set the lowest point for the pair since May 6. If the aussie-dollar pair falls further, 0.732 is seen as the next target level. The pair closed Friday's North American session at 0.7497.

The Aussie that rose to a 7-month high of 0.7716 against the greenback on May 11 has lost around 3.4% since then.

The Australian dollar that closed Friday's North American session at 1.8000 against the European currency slipped to a 4-day low of 1.8038 in early Asian deals on Monday. The next downside target level for the aussie is seen around 1.815. The euro-aussie pair is currently quoted at 1.7987.

On May 7, the Australian currency edged higher to 1.7491 versus the euro, its highest mark since February 29 2008. Thereafter, the aussie reversed its direction and has depreciated around 4% since last week.

The Australian and New Zealand dollars registered strong gains against their key counterparts on May 7, as labor-market reports were better than economists estimated.

The number of people employed climbed 27,300 from March, the statistics bureau said in Sydney. Analysts were looking for a decline of 25,000 jobs. Meanwhile, the unemployment rate came in surprisingly lower at 5.4 percent in April, defying expectations for a 5.9 percent rise following a five-year high of 5.7 percent in March.

Meanwhile, New Zealand's jobless rate rose less than economists expected. The jobless rate increased to a 6-year high of 5 percent in the first quarter of 2009, compared with the estimate of a 5.3 percent increase.

Earlier this month, the Reserve Bank of Australia held its key interest rate unchanged as expected at a 49-year low of 3% after cutting it by quarter points on April 7. The central bank has slashed the cash rate by 125 basis points since December 2008 and the official cash rate now stands at its lowest level in 49 years.

In its First Quarter Monetary Policy Statement, the RBA slashed its GDP forecast for Q2 to -1.25 percent on year, marking what would be Australia's first recession in nearly 20 years. The RBA said it expects GDP to return to positive by June 2010, and to grow to 3.75 percent by December 2011.

The RBA expects the economy will contract by 1.0 per cent in the fourth quarter of 2009 from a year earlier, down sharply from its February forecast of 0.5 per cent growth. The bank also lowered its second quarter and fourth quarter 2010 forecasts and expects fourth quarter 2010 gross domestic product growth of 2.0 per cent, down from a February forecast of 2.5 per cent.

Against the Japanese yen, the Australian currency plunged to an 18-day low of 70.56 during Monday's early Asian deals. This may be compared to Friday's closing value of 71.28. The pair is now worth 70.90 with 69.4 seen as the next target level.

The Australian dollar lost ground after hitting a 7-month high of 76.21 against the yen on May 11. The aussie depreciated around 7.4% versus the yen to hit a new multi-day low today.

In economic news from Japan, a report from the Cabinet Office showed that Japanese consumer confidence rose to 33.2 in April from 29.6 in the previous month. Economists had expected the index to rise to 31.

Meanwhile, household's consumer confidence stood at 32.4, up from 28.9 in March. The reading also stood above the expected level of 32. All four sub indicators improved from the previous month. The index for overall livelihood came in at 33.8, up from 31.1 and income growth rose to 33.4 from 32. The employment and willingness to buy durables climbed to 23.3 and 39, respectively.

The Australian dollar that closed Friday's New York deals at 0.8846 against its Canadian counterpart touched a 4-day low of 0.8797 during today's early Asian trading. On the downside, 0.866 is seen as the next target level for the Aussie. The aussie-loonie pair is presently trading at 0.8812.

The Australian currency has lost around 2% against the loonie since reaching a new multi-week high on May 12.

The New Zealand dollar also tumbled to new multi-day lows against the currencies of U.S. and Japanese counterparts after a report showed that New Zealand's Producer Input Prices tumbled -2.5% in the first quarter, the largest since the series began in the December 1977 quarter.

Producer input prices fell 2.5 percent and output prices fell 1.4 percent in the first quarter of 2009, Statistics New Zealand said today. Lower prices for imported crude oil and for fuel made major contributions to the fall in input prices, while lower prices in the dairy product manufacturing index drove down output prices. In the year to the March 2009 quarter, the PPI inputs index rose 4.7 percent and the outputs index rose 6.5 percent.

Meanwhile, the capital goods price index or CGPI rose 1.2% sequentially in the March quarter, after a 1.1% increase in the December quarter, the Statistics New Zealand said today. On an annual basis, the CGPI climbed 4.9% in the first quarter, reflecting the largest annual increase since the series began in the December 1989 quarter. Last year, in the March quarter, the index was up 2.5%.

The NZ dollar edged down to an 11-day low of 0.5837 against the US dollar and an 18-day low of 55.27 versus the Japanese yen. The next downside target level for the New Zealand currency is seen around 0.575 against the greenback and 54.0 against the yen. The New Zealand dollar closed last week's trading at 10.5865 against the greenback and 55.77 versus the yen.

On the other hand, the kiwi showed strength against the European currency and the Australian dollar. The New Zealand dollar climbed to 2.2942 against the euro and 1.2758 versus the aussie, compared to last week's closing value of 2.3021 and 1.2797, respectively. If the NZ dollar gains further, the kiwi may likely target 2.250 against the single currency and 1.262 versus the Australian currency.

The euro remained under selling pressure on hopes that the European central bank may slash interest rate from 1% when it meets on June 4, to spur recovery in the European economy.

Euro area witnessed its biggest economic contraction since the records began in 1995. Annual inflation stood at historic low, as price pressures stay tilted to the downside amid slowing economic activity.

Friday, flash estimate released by Eurostat, the Statistical Office of the European Communities said the euro area GDP declined 2.5% sequentially in the first quarter of 2009 compared to a 1.6% decline in the fourth quarter. Economists were looking for a 2% fall in the first quarter. The first quarter decline was the largest since 1995.

The recession in Eurozone was severe than in the U.S., where the GDP was down 1.6% sequentially in the first quarter, following a 1.6% fall in the fourth quarter of previous year.

At 5.00 am ET, the Eurostat is slated to release the trade data. The Eurozone trade deficit is seen at EUR 0.3 billion in March, smaller than the EUR 2 billion deficit reported in February. On a seasonally adjusted basis, the trade deficit is expected to fall to EUR 3.8 billion from EUR 4 billion.

The U.S. Treasury Secretary Timothy Geithner is scheduled to speak at Newsweek Magazine event at 11:30 am ET today.

Meanwhile, the NAHB housing market report has been slated for release at 1:00 pm ET.

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