The Australian dollar weakened against all of its 16 major peers before the leaders of Germany and France meet today amid concern Europe’s sovereign-debt crisis is hurting global growth. The so-called Aussie fell for a fourth day after data showed the South Pacific nation’s retail sales unexpectedly stagnated in November and Pacific Investment Management Co. said the Reserve Bank will need to ease monetary policy. New Zealand’s dollar, nicknamed the kiwi, maintained a three-day drop after a report showed the nation’s trade deficit widened. “Risk appetite within the market is still off, and in the short term I’m still bearish on the Aussie and kiwi,� said Kara Ordway, a foreign-exchange strategist at City Index Asia Pacific in Sydney. “People are now saying that a recession in Europe, or a double dip, is far more likely than in the U.S.� Australia’s dollar fell 0.5 percent to $1.0173 as of 4:28 p.m. in Sydney from the close in New York on Jan. 6. New Zealand’s currency was little changed at 78.02 U.S. cents. German Chancellor Angela Merkel and French President Nicolas Sarkozy meet in Berlin today to flesh out a new rulebook for fiscal discipline negotiated at a Dec. 9 summit that seeks to create a “fiscal compact� for the 17-member euro area. The talks will be followed by a joint press conference. Credit Ratings Germany will offer 4 billion euros ($5.1 billion) of six- month bills today, and France will auction a total of 7.7 billion euros of debt maturing in 364 days or less. Greece will offer bills tomorrow, while Spain and Italy will sell debt later this week. Standard & Poor’s said last month it may lower the credit grades of 15 euro nations, including Germany and France. Australia’s retail sales (AURSTSA) were unchanged in November, a report from the statistics bureau showed today, compared with the 0.4 percent gain estimated by economists in a Bloomberg News survey. “Today’s data suggests that consumers remain hesitant to spend up, given weaker prospects for global growth, and supports the view that the RBA will cut rates again,� Janu Chan, an economist at St. George Bank Ltd. in Sydney, wrote in a note about the retail sales data. Traders are speculating that Australia’s central bank will lower its benchmark interest rate from the current level of 4.25 percent. Cash rate futures indicate the key rate will fall 0.75 percentage point by May. Pimco’s Forecast “The past six months have been an important reminder that small open economies such as Australia are not immune to the broader global business cycle,� Robert Mead, the head of portfolio management in Australia at Pimco, manager of the world’s biggest bond fund, wrote in an e-mailed report today. “We think the RBA will need to ease further in 2012.� Australian 10-year government notes advanced, with yields falling six basis points, or 0.06 percentage point, to 3.73 percent. Statistics New Zealand said today that the country’s imports exceeded exports by NZ$308 million ($240 million) in November, compared with a revised NZ$228 million deficit in October. The median estimate of economists was for a NZ$300 million shortfall. Futures traders raised their bets the Australian dollar will rise against the U.S. currency, figures (.ADLRGN) from the Washington-based Commodity Futures Trading Commission show. The difference in the number of wagers by hedge funds and other large speculators on a gain in the Aussie compared with those on a drop was 46,537 on Jan. 3. While the so-called net longs were the most since September, the number was still less than the 2011 high of 90,938. The net longs on Australia’s currency “remain well below their highs, reflecting some uncertainty regarding the global economic outlook,� Emma Lawson, a currency strategist at National Australia Bank Ltd. in Sydney, wrote in a report today. To contact the reporter on this story: Masaki Kondo in Singapore at mkondo3@bloomberg.net To contact the editor responsible for this story: Garfield Reynolds at greynolds1@bloomberg.net

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