The Australian dollar fell against 15 of its 16 major counterparts before the Reserve Bank releases minutes tomorrow of its December meeting when it cut interest rates for the second-straight month. The New Zealand dollar weakened amid concern euro-area policy makers won’t be able to contain the region’s sovereign- debt crisis as they discuss additional funding through the International Monetary Fund. Both South Pacific nations’ currencies extended losses after state television in North Korea announced the death of leader Kim Jong Il, sapping demand for riskier assets. “We’re looking for markets to remain volatile given the uncertainty about the euro-area outlook,� said Emma Lawson, a currency strategist at National Australia Bank Ltd. in Sydney. “The market will be expecting the RBA to have downgraded the economic outlook to some degree to warrant the interest-rate cut, so what we’ll be looking for is to what degree that was due to the European situation.� The Australian dollar fell 0.7 percent to 99.11 U.S. cents as of 4:03 p.m. in Sydney from 99.83 in New York on Dec. 16. The so-called Aussie declined 0.5 percent to 77.27 yen. New Zealand’s currency weakened 0.5 percent to 75.79 U.S. cents. The so-called kiwi dropped 0.2 percent to 59.08 yen. The MSCI Asia Pacific Index (MXAP) of stocks fell 2.1 percent while South Korea’s Kospi index slumped as much as 4.9 percent after Kim’s death was reported. RBA Minutes The RBA is scheduled to release tomorrow the minutes of its most recent policy meeting on Dec. 6, when it cut the overnight cash rate target to 4.25 percent from 4.5 percent, its first back-to-back reduction since 2009. “Financing conditions have become much more difficult, especially in Europe,� RBA Governor Glenn Stevens said in a statement accompanying that decision. “This, together with precautionary behavior by firms and households, means that the likelihood of a further material slowing in global growth has increased.� A Credit Suisse Group AG index based on swaps shows traders are betting Australia’s central bank will cut rates by 134 basis points during the next 12 months. That compares with wagers for 112 basis points of easing indicated on Dec. 7. Euro-region finance ministers will hold a conference call today to discuss 200 billion euros ($261 billion) in additional funding through the IMF and the mechanics of a so-called fiscal compact that was negotiated at a Dec. 9 European Union summit, according to two people familiar with the planning. “The risks are that you get some wavering from the finance ministers at the meeting in the next couple of days in Europe or a lack of detail that will worry the market,� said NAB’s Lawson. Australian Bonds Australia’s government bonds advanced, pushing the yield on the 10-year security down 5 1/2 basis points, or 0.055 percentage point, to 3.73 percent. It earlier touched 3.71 percent, the lowest on record. New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, slid four basis points to 2.65 percent. Kim Jong Il, who came to power in North Korea following his father’s death in July 1994 and built nuclear weapons in the face of global condemnation, died on Dec. 17, the official Korean Central News Agency said. A government statement called on North Koreans to “loyally follow� his son, Kim Jong Un. “There are obviously some uncertainties about the next leadership transition in North Korea and it triggers some concerns about the country’s relationship with South Korea,� said Lee Wai Tuck, a strategist at Forecast Pte in Singapore. “Some risk aversion is happening at the moment, so investors are selling the Aussie, selling the kiwi, and buying back the dollar.� The Australian dollar has fallen 3.2 percent against its U.S. counterpart this year, while the kiwi has dropped 2.9 percent. -- Editors: Benjamin Purvis, Jonathan Annells. To contact the reporters 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.

Source