Australia’s dollar fell for a second day versus its U.S. counterpart as Asian stocks extended global losses in equities, curbing appetite for higher-yielding assets. The so-called Aussie is set for a fourth weekly drop against the yen as traders increased bets for an interest-rate cut from Australia’s central bank amid worries that global growth is slowing. New Zealand’s dollar headed for a third weekly loss versus the greenback, its longest losing streak since May 2010, after commodity prices slid. “Equities are likely to stay down in Asia,” said Roland Randall, senior strategist for rates and foreign exchange in Singapore at TD Securities Inc., wrote in a note today. “We probably won’t see a big rally back in the Aussie.” Australia’s dollar slid to $1.0365 at 2 p.m. in Sydney from $1.0391 in New York yesterday. It declined to 79.29 yen from 79.57 yen. New Zealand’s currency was at 82.26 U.S. cents from 82.14 cents, set for a 1.2 percent loss this week. The so-called kiwi traded at 62.93 yen from 62.91 yen. The MSCI Asia Pacific Index of regional shares dropped 2.5 percent. The Standard & Poor’s 500 Index slumped 4.5 percent yesterday and is headed for a fourth week of declines. Crude oil dropped as much as 2.1 percent in afterhours trading on the New York Mercantile Exchange. The Thomson Reuters/Jefferies CRB Index of raw materials lost 2.3 percent yesterday. Rate Cut Bets The Australian dollar maintained losses as traders increased bets the Reserve Bank of Australia will decrease borrowing costs amid worries that growth in the global economy will continue to be limited. “A significant global downturn, particularly one that affected China and commodity prices, is a key risk to Australia and would likely see a substantial cut to the RBA’s cash rate,” HSBC Holdings Plc’s Sydney-based Chief Economist Paul Bloxham wrote in a report today. Yields for December interbank cash-rate futures fell to 3.60 percent on the Sydney Futures Exchange, indicating traders expect the Reserve Bank of Australia to lower its benchmark borrowing cost by at least one percentage point this year. Year-End Dip The Aussie may dip to $1.01 and 74.70 yen by year-end, Morgan Stanley said in a report yesterday. “We expect the Australian dollar to be particularly vulnerable over the latter part of 2011 especially given the deterioration in the domestic picture in Australia,” Ian Stannard, head of European foreign-exchange strategy at Morgan Stanley, wrote in the report. Australia’s currency has depreciated 4.5 percent so far this year, making it the third-worst performer among the 10 developed-nation currencies tracked by Bloomberg Correlation- Weighted Currency indexes. Australia’s benchmark 10-year yield declined to 4.2 percent, its lowest since March 2009 based on closing values. Yields on its three-year debt lost 12 basis points to 3.53 percent. The spread between the U.S. and Australian two-year yields narrowed to 3.33 percentage points, the lowest since February 2010. New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, was little changed at 3.29 percent. To contact the reporter on this story: Kristine Aquino in Singapore at kaquino1@bloomberg.net To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net

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