The Australian dollar fell against all of its major peers after the Reserve Bank of Australia cut interest rates by 25 basis points for a second-straight month. New Zealand’s dollar also declined as Standard & Poor’s put 15 euro-zone nations on watch for downgrades. Losses in the South Pacific currencies were limited after France and Germany said they want a rewrite of the European Union’s rules to enable closer cooperation in tackling the region’s debt problems. The RBA reduced its key rate to 4.25 percent in its first back-to- back easing since February 2009. “We’re still of the view that the RBA has scope to potentially ease towards 3.75 percent by the end of 2012,� said Sue Trinh, a senior currency strategist at Royal Bank of Canada in Hong Kong. The Aussie fell “marginally� after the rate cut, she said. The Australian dollar dropped 0.7 percent to $1.0201 as of 2:55 p.m. in Sydney from yesterday, when it advanced 0.6 percent. The currency lost 0.7 percent to 79.37 yen. New Zealand’s currency, nicknamed the kiwi, fell 0.3 percent to 77.78 U.S. cents from yesterday, when it added 0.4 percent. It slid 0.3 percent o 60.51 yen. Today’s rate decision was predicted by 13 of 25 economists surveyed by Bloomberg News. The rest forecast no change. “Financial markets have experienced considerable turbulence, and financing conditions have become much more difficult, especially in Europe,� RBA Governor Glenn Stevens said in a statement accompanying the decision. “This, together with precautionary behavior by firms and households, means that the likelihood of a further material slowing in global growth has increased.� Credit Ratings Germany, France, Netherlands, Austria, Finland and Luxembourg -- the euro area’s six AAA rated countries -- are among the nations being placed on “CreditWatch negative,� pending the result of a EU summit, S&P said. “The news of the European nations on creditwatch by S&P, some of that impact appears to be still being felt and could filter through markets today,� said Janu Chan, an economist at St. George Bank Ltd. in Sydney. “The Aussie might be weighed down on general sentiment coming from Europe.� The downgrade warnings come as German Chancellor Angela Merkel and French President Nicolas Sarkozy presented a common platform for a Dec. 8-9 gathering of EU leaders in Brussels that aims to halt the region’s debt crisis. The plan calls for automatic penalties for deficit violators and locking limits on debt into euro states’ constitutions. The MSCI Asia Pacific Index of stocks dropped 1.2 percent. 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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