Aug. 20 (Bloomberg) -- The Australian dollar weakened for a second straight week as speculation the global recovery is losing momentum sapped demand for higher-yielding assets. Australia’s currency traded near a four-week low versus the yen before reports next week forecast to show U.S. home sales fell, Japanese export growth slowed and German business sentiment weakened. Demand for the so-called Aussie was limited by concern tomorrow’s election will result in a hung parliament. “The outlook for the global economy remains hazy, contributing to risk aversion,” said Hiroshi Yanagisawa, a dealer in Tokyo at FX Prime Corp., a foreign-exchange unit of trading house Itochu Corp. “People are still inclined to shun riskier assets.” Australia’s currency fell 0.6 percent to 88.74 U.S. cents as of 10:16 a.m. in New York from 89.27 yesterday, heading for a 0.6 percent loss this week. The currency was at 76 yen from 76.22 yen, after sliding to 75.48, the lowest since July 20. New Zealand’s dollar dropped 0.9 percent to 70.11 cents from 70.71, and traded at 60.02 yen from 60.37 yen. The so- called kiwi is set for a fourth-weekly loss versus Japan’s currency. The Australian dollar was poised for a weekly decline versus most of its 16 major counterparts due to speculation next week’s data will add to evidence the world’s economic recovery is losing momentum. Slowing Growth Purchases of existing U.S. homes fell 13.9 percent in July, after declining 5.1 percent in May, economists said before the Aug. 24 report. Japan’s export growth slowed to 21.8 percent in July from 27.7 percent the prior month, and the Ifo institute’s German business climate index dropped to 105.5 in August from 106.2 the previous month, separate surveys showed ahead of the Aug. 25 reports. The MSCI Asia Pacific Index of shares dropped 1.5 percent after U.S. reports yesterday showed the Federal Reserve Bank of Philadelphia’s general economic index dropped and weekly unemployment claims unexpectedly increased. “Given uncertainties for the global economy, expectations for successive interest-rate increases in countries like Australia and New Zealand, are not likely to rise notably in the near-term,” said Kazumasa Yamaoka, a chief strategist at investment advisory company GCI Research Institute Ltd. in Tokyo. Demand for Australia’s dollar was limited as polls ahead of tomorrow’s election showed voters almost evenly split between the ruling Labor Party and opposition Liberal-National coalition. “Two factors have made the election more interesting - the threat of a hung parliament and significant differences across the major and minority parties on a mining sector tax,” David Forrester, a currency economist in Singapore at Barclays Capital, wrote in a note to clients. “We favor positioning for a weaker Aussie versus other commodity currencies.” --Editors: Paul Cox To contact the reporters on this story: Yasuhiko Seki in Tokyo at yseki5@bloomberg.net; Catarina Saraiva in New York at asaraiva5@bloomberg.net To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net

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