The Australian dollar fell as U.S. equities plunged and Australia’s stock benchmark dropped to a six-year low after China quelled speculation it will add to its stimulus plan. New Zealand’s dollar was little changed. The currencies slid against the yen for the first time in three days before a report next week that may show Australian unemployment rose last month to the most since April 2006. The Reserve Bank of New Zealand will lower borrowing costs from a record low 3.5 percent on March 12, according to a Bloomberg survey of economists. “We are going to see the negative impact of what is going on in the global economy beginning to hit home in sentiment and ultimately in the payrolls numbers,” said Robert Rennie, chief currency strategist at Westpac Banking Corp. in Sydney. The Australian dollar will break below 62.90 U.S. cents over the course of the week, he said. The currency fell 0.1 percent to 64.24 U.S. cents as of 4:14 p.m. in Sydney from 64.29 cents late in Asia yesterday. It slid 1.3 percent to 63.09 yen. The Australian dollar advanced 0.6 percent from 63.88 cents in New York on Feb. 27 and rose 1.2 percent from 62.35 yen over the week. New Zealand’s dollar traded at 50.21 U.S. cents from 50.16 cents in Asia yesterday and 50.08 cents in New York late last week. It slid 1.2 percent to 49.31 yen from 49.90 yen yesterday and 48.90 yen a week ago. The Standard & Poor’s 500 Index sank to the lowest level since 1996 after Moody’s Investors Service said it may cut JPMorgan Chase & Co.’s credit rating and General Motors Corp.’s auditor said the automaker may not survive. Australia’s S&P/ASX 200 Index dropped to its weakest since August 2003. GDP, Trade Surplus Australia’s gross domestic product shrank 0.5 percent from the third quarter, the statistics bureau said March 4. Economists had forecast 0.2 percent growth. The trade balance expanded to A$970 million (A$619 million), less than the median estimate for A$1.1 billion in a Bloomberg News survey. The number of people employed probably fell by 20,000 and the unemployment rate likely rose to 5 percent in February, reports next week will show according to the median estimate of economists surveyed by Bloomberg News. “Australia’s negative macro-dynamic will now take over as the main driver in pushing the Australian dollar lower,” wrote Stewart Newnham, Morgan Stanley’s Hong Kong-based currency strategist, in a research note yesterday. “We remain bearish on the Australian dollar, targeting 53 U.S. cents by year-end.” Rate Cuts Halted The Reserve Bank of Australia halted its most aggressive round of rate cuts March 3, keeping its cash target at a 45-year low of 3.25 percent after lowering rates 4 percentage points since early September. New Zealand’s central bank is forecast to reduce borrowing costs to 2.75 percent when it meets March 12, according to the median estimate of 11 economists surveyed by Bloomberg News. Higher interest rates in Australia and New Zealand, compared with 0.1 percent in Japan and as low as zero in the U.S. attract investors to the South Pacific nations’ higher-yielding assets. The risk in such trades is that currency market moves will erase profits. “The New Zealand dollar could easily slip to 45 U.S. cents with the upcoming RBNZ rate cut and the current account deficit and GDP data at the end of March major threats,” Stephen Koukoulas, London-based head of global foreign exchange and fixed-income strategy at TD Securities, wrote in a note to clients. The nation reports current account figures on March 26 and GDP on March 27. Australian government bonds rose for the first day in four. The yield on 10-year notes fell 17 basis points, or 0.17 percentage point, to 4.24 percent, according to data compiled by Bloomberg. The price of the 5.25 percent security due March 2019 rose 1.40, or A$14 per A$1,000 face amount, to 108.15. New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, fell to 3.25 percent from 3.30 percent yesterday.

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