The Australian and New Zealand dollars fell for a second day as concern the global economy is slowing prompted investors to sell higher-yielding assets. The kiwi slid after a government report showed home- building approvals declined for the second time in three months. The South Pacific currencies extended quarterly losses as Japan said industrial production fell and its jobless rate rose, and before data forecast to show U.S. consumer confidence worsened. “We’re seeing risk easing off with talk coming out about a double-dip recession,” said Alex Sinton, a senior dealer at ANZ National Bank Ltd. in Auckland. “There’s a bias to the downside for both the Aussie and kiwi.” The Australian dollar dropped 0.7 percent to 86.63 U.S. cents as of 2:41 p.m. in Sydney from yesterday in New York. It slid 1.2 percent to 77.03 yen and touched 76.97 yen, the least since June 11. New Zealand’s dollar declined 0.8 percent to 70.20 U.S. cents and weakened 1.1 percent to 62.61 yen, near a two-week low. The Aussie has lost 5.5 percent since March 31 against the greenback, poised to end four quarters of gains. The kiwi has weakened 1.1 percent over the same period. Home-building permits declined 9.6 percent from April when they gained a revised 8.4 percent, Statistics New Zealand said, citing seasonally adjusted figures. N.Z. Rates Reserve Bank of New Zealand Governor Alan Bollard on June 10 raised the official cash rate a quarter point, the first increase in three years, and said he expected to raise borrowing costs further this year. There is an 80 percent chance of a quarter-point increase on July 29, according to a Credit Suisse AG index based on swaps trading. “If consent issuance does not pick up as expected, then this should certainly be a factor necessitating the need for the Reserve Bank to pause,” said Philip Borkin, economist at Goldman Sachs JBWere Ltd. in Auckland. Japan’s factory output fell 0.1 percent in May after rising 1.3 percent in April, the Trade Ministry reported today. The nation’s jobless rate rose to 5.2 percent last month from 5.1 percent in April, the government reported. The Conference Board’s confidence index in the U.S. fell to 62.5 this month from 63.3 in May, according to a Bloomberg survey before the New York-based group’s report today. ‘Jittery Markets’ “Market conditions remain very uncertain and jittery and that’s keeping model-based buyers of high-yield crosses like Aussie-yen on the sidelines,” said Robert Minikin, a senior foreign-exchange strategist in Hong Kong at Standard Chartered Plc. That’s “an important underlying supportive factor for both the Swiss franc and Japanese yen.” Benchmark interest rates are 4.5 percent in Australia and 2.75 percent in New Zealand, attracting investors to the South Pacific nations’ higher-yielding assets. That compares with 0.1 percent in Japan and as low as zero in the U.S. New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, fell to 4.16 percent from 4.21 yesterday. Australian bond futures rose, with the 10-year contract for September delivery at 94.82 on the Sydney Futures Exchange from 94.755 yesterday. The implied yield on the futures stood at 5.18 percent. The implied yield on three-year futures was 4.67 percent. To contact the reporter on this story: Candice Zachariahs in Sydney at czachariahs2@bloomberg.net.

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