The Australian dollar opened lower today after ratings agency Moody’s said it would review the credit rating of the world’s biggest miner, BHP Billiton, following the latter’s takeover bid for Canada’s Potash group.
At 0700 AEST today, the local unit was trading at $US0.8982/84, down from Wednesday’s close of $US0.9005/08.
Since 1700 AEST on Wednesday, the local currency traded between $US0.8972 and $US0.9047.
Latitude FX sales analyst Jeremy Jukes said the local dollar slid overnight after ratings agency Moody’s said it would review mining giant BHP’s long term credit rating after the miner launched a hostile takeover bid for Canada’s Potash Corp.
“That’s one reason the Aussie fell away,” Mr Jukes said.
The offer, worth the equivalent of 31 billion euros ($A44.12 billion), would allow the energy and metals giant to expand in the agricultural sector amid soaring wheat prices and keen food demand to meet the needs of the world’s rising population.
Moody’s said it would review BHP’s A1 credit rating if the resource hulk starts raising large amounts of debt to complete the takeover.
But the ratings agency said BHP’s credit rating would be unlikely to drop below A2 even if the deal went ahead. Potash is a fertiliser that is widely used in farming to replenish nutrients in soils and increase crop yields.
Mr Jukes said the local dollar had been susceptible to a decline since Wednesday’s release of the Westpac/Melbourne Institute’s index of economic activity, which pointed to a slow down in the domestic economy over the next nine months.
The leading index is closely watched by market observers. The survey’s leading index of economic activity was virtually unchanged in June after it fell 0.1 point in the month.
On an annualised basis, the growth rate decelerated to six per cent, down from 7.4 per cent in May.
Mr Jukes said with no market-moving data due during the domestic session, currency traders would take their lead from the local share market.