The Australian dollar traded 0.4 percent from a three-week low before the Reserve Bank of Australia releases minutes today of its December meeting when it cut interest rates for the second-straight month. The New Zealand dollar held losses from yesterday before Spain sells bills today as the country faces the risk of a credit downgrade. Both South Pacific nations’ currencies declined yesterday as the death of North Korean leader Kim Jong Il stoked concern cross-border tensions in the region will escalate. “We are expecting the RBA will be cutting rates in February,� said Janu Chan, an economist at St. George Bank Ltd. in Sydney. “If they signal that they will provide some more monetary easing, we could see the Aussie come down.� The Australian dollar was little changed at 99.01 U.S. cents at 10:16 a.m. in Sydney from 98.96 cents yesterday in New York, when it tumbled 0.9 percent. It reached the lowest level since Nov. 29 last week, falling to 98.61 U.S. cents. The so- called Aussie was at 77.28 yen from 77.24 yesterday. New Zealand’s currency fetched 75.59 U.S. cents from 75.55 cents yesterday when it dropped 0.8 percent. The currency fetched 58.97 yen from 58.97. Australia’s government bonds advanced, pushing the yield on the 10-year security down as much as three basis points, or 0.03 percentage point, to 3.69 percent, the lowest on record. The MSCI World Index of stocks (MXWO) fell 1 percent yesterday. RBA Minutes The RBA is scheduled to release today 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. Spain is due to auction three- and six-month securities today while Greece is scheduled to auction 1 billion ($1.3 billion) euros of three-month bills. Fitch Ratings lowered its outlook on France to “negative� on Dec. 16 and also put Spain and Italy on review for a reduction. “Recent bond auctions may have been a little better than what the market has feared, but I think there could be some events that might be a little worrying such as potential sovereign-rating downgrades,� said St. George Bank’s Chan. “There is still some potential downside to Aussie and to kiwi.� The Australian dollar has fallen 3.2 percent against its U.S. counterpart this year, while the kiwi has dropped 3.1 percent. -- Editors: Rocky Swift, Benjamin Purvis 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.

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