The Australian and New Zealand dollars headed for weekly declines on concerns the U.S. stimulus plan may not be enough to ease a recession in the world’s largest economy. The currencies advanced today on reports President Barack Obama’s housing plan will use government money to help reduce interest rates for struggling borrowers. Gains may be limited on speculation that the Group of Seven major industrial nations may discuss exchange rates during a meeting that starts today. “Investors are still worried that the U.S. stimulus might not be enough to revive the economy,” said Besa Deda, chief economist at St. George Bank Ltd. in Sydney. Markets may be “a touch nervous” ahead of the G-7 meeting, pushing the Australian dollar toward 65 U.S. cents and New Zealand’s may trade at around 51.60 cents, she said. Australia’s currency fell 2.8 percent to 65.59 U.S. cents as of 11:13 a.m. in Sydney from 67.49 cents in New York Feb. 6. The currency slipped 4.3 percent to 59.38 yen from 62.06 yen in New York. New Zealand’s dollar lost 1.8 percent to 52.21 cents and 3.2 percent to 47.29 yen from 48.84 on Feb. 6. The currencies climbed today as equity markets erased earlier losses on speculation that help for struggling mortgage borrowers will halt the slide in property prices in the U.S. Mortgage Subsidy “News about a possible mortgage subsidy plan seemed to soothe the stock markets and that sentiment played across to the high-yielding currencies,” said Tim Waterer, a foreign exchange dealer with CMC Markets in Sydney. The Australian dollar may break out of its 64 to 68 cent range if the government wins approval for the A$42 billion ($27 billion) economic stimulus package that was rejected by the Senate yesterday. Prime Minister Kevin Rudd’s government is working to broker a deal with independent lawmakers to overcome their opposition to the plan. Investors should bet the Australian dollar will perform better than other currencies, in particular New Zealand’s, on relative labor market strength, Citigroup said in a report yesterday. Australia’s employers unexpectedly added 1,200 workers more than they fired in January. Economists on average anticipated a drop of 18,000, according to a Bloomberg News survey. New Zealand’s dollar briefly pared gains today after Statistics New Zealand said retail sales fell for a fourth straight quarter, the most prolonged decline on record. House sales slumped 28.5 percent in January from a year earlier to the lowest level since at least 1989, the country’s Real Estate Institute said. Bond Sales Australia sold A$601 million of bonds at a weighted average yield of 3.69 percent in the third sale of its expanded borrowing program to raise as much as A$24 billion through June 30. Buyers bid for 2.9 times the securities offered in the sale of bonds maturing 2014, the Australian Office of Financial Management said today. Australian government bonds were little changed with the yield on the 10-year note rising to 4.19 percent, according to data compiled by Bloomberg. The price of the 5.25 percent security due March 2019 slipped 0.031, or A$0.31 per A$1,000 face amount, to 108.649. New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, fell to 3.28 percent from 3.34 yesterday.

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