Australia’s dollar fell versus its U.S. counterpart for a second day amid prospects ebbing price pressures will allow Reserve Bank of Australia Governor Glenn Stevens to cut interest rates at a policy meeting tomorrow. The so-called Aussie declined against 15 of its 16 major peers as investor demand for riskier assets abated before a report forecast to show business activity in the U.S. weakened. The Australian and New Zealand dollars rallied against the yen after Japan intervened to weaken its currency. “It’s certainly possible that we will see a rate cut from the RBA tomorrow,” said Joe Heffernan, a senior economist at St. George Bank Ltd. in Sydney. “That could potentially weigh on the Aussie dollar.” The Australian dollar fell 1.5 percent to $1.0536 as of 4:36 p.m. in Sydney from Oct. 28 when it declined 0.3 percent. The so-called Aussie jumped 2.8 percent to 83.44 yen, the highest since Aug. 4. New Zealand’s dollar dropped 1.3 percent to 81.02 U.S. cents. The so-called kiwi rallied 3.1 percent to 64.17 yen, the highest since Sept. 9. Futures traders see an 80 percent chance of a 25 basis- point reduction in the RBA’s target rate when the central bank policy makers meet tomorrow. Australia’s consumer prices rose 2.6 percent this month from a year earlier, compared with a 2.8 percent annual gain in September, according to an index compiled by TD Securities Inc. and the Melbourne Institute released in Sydney today. Inflation slowed for a third-straight month, the data showed. U.S. Cooling Signs The Institute for Supply Management-Chicago Inc. may say today its U.S. business barometer fell to 59 this month from 60.4 in September, according to the median estimate in a Bloomberg News survey. A level of 50 is the dividing line between expansion and contraction. Data due later in the week may show that American employment cooled in October, according to a separate survey. Federal Reserve Bank of New York President William C. Dudley said last week “it’s possible that we could do another round of quantitative easing.” “The central bank’s meeting this week will be the focus of markets,” said St. George Bank’s Heffernan. “If we see the U.S. FOMC start to talk about the possibility of more of QE3 that would obviously be a market driver for the Aussie.” European Optimism Wanes Demand for the kiwi and Aussie was also limited as expectations faded that Europe can contain its debt crisis. “Europe is potentially headed for a recession,” said Derek Mumford, a director in Sydney at Rochford Capital, a foreign-exchange risk-management firm. “We could see risk aversion kick back into the market on any sign things are not fine in Europe. The market could potentially be very volatile.” Leaders from the Group of 20 nations convene Nov. 3-4 in Cannes, France, a week after euro-area authorities pledged to magnify the capacity of their rescue fund to 1 trillion euros ($1.4 trillion) and look beyond their borders for help. Japan’s Finance Minister Jun Azumi said the government intervened unilaterally in the foreign-exchange market to halt the yen’s rise after the currency reached a post- World War II high against the dollar earlier today. “The scale of Japanese authorities’ intervention seems large, possibly more than $1 billion,” said Marito Ueda, senior managing director in Tokyo at FX Prime Corp., a currency margin company. “They’re likely to continue intervening to sell yen, at least for today.” To contact the reporter on this story: Mariko Ishikawa in Tokyo at mishikawa9@bloomberg.net; To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net

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