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Global investment bank Lehman Brothers recommends selling Australian and New Zealand dollars because the nations' economies are unlikely to avoid the effects of a slowdown in US growth.
"Those trumpeting decoupling better think twice about it," said David Mozina, senior vice-president of foreign exchange strategy at Lehman Brothers in New York.
"The financial linkages are still too great."
The firm advises making bets on a decline in the currencies against the US dollar, the Japanese yen and the Swiss franc on concern that a US recession could last for the next three to six months. The Australian and the NZ dollar each fell to their lowest levels in a week on Saturday.
New Zealand's dollar rose yesterday after a government report showed inflation accelerated faster than expected, boosting speculation the central bank would have to keep the benchmark interest rate at a record high. "There's a lot of good news baked into the price already," said Mozina. He expects the Reserve Bank of Australia to raise interest rates at it's next meeting on February 2 and the Reserve Bank of New Zealand to leave it's rate unchanged.
