The Australian dollar weakened on speculation its record 20 percent advance against the U.S. currency in the past three months was too rapid. New Zealand’s dollar declined. The two currencies also dropped as most Asian equities fell on concern North Korea may step up missile tests after the nation said yesterday it conducted a nuclear explosion underground and launched three short-range missiles. New Zealand’s currency halted a six-day advance after a government report showed exports declined in April as the global recession damped demand for commodities such as milk products. “The Aussie is teetering on the topside of a trend and looks like it needs a pullback,” said Charles Wiggins, corporate risk manager at Custom House Global Foreign Exchange in Sydney. “The Australian dollar will find support around 77.60 cents.” Australia’s currency fell 0.4 percent to 77.90 U.S. cents as of 3:27 p.m. in Sydney from yesterday in New York. It rose as high as 78.67 cents on May 22, the strongest level since Oct. 2. The currency slid to 0.6 percent to 73.75 yen. New Zealand’s dollar declined 0.4 percent to 61.84 U.S. cents and lost 0.5 percent to 58.54 yen. New Zealand’s currency will find buyers at 61.50 U.S. cents today, Wiggins said. Analyst Forecasts The Australian dollar’s strongest ever three-month rally has pushed currency analysts to raise forecasts for the so- called Aussie faster than any other major currency. The median year-end Aussie forecast in monthly Bloomberg surveys rose 14 percent this year to 75 cents, the biggest increase among the 16 most-traded currencies against the U.S. dollar, and is now about 3 cents shy of the current price. Strategists at BNP Paribas SA, Wells Fargo & Co. and 21 other companies raised estimates in May on speculation China’s demand for Australian exports, from iron ore to wool, will rebound. “As long as we have domestic demand in Asia being built up over the coming quarters, the Aussie has the potential to do well,” Sharada Selvanathan, a currency strategist at BNP Paribas in Hong Kong, said in a Bloomberg Television interview. “Decent pullbacks in the Australian dollar provide a good opportunity to form some medium- to long-term long positions.” Long positions are bets an asset will rise. Melbourne-based Rio Tinto Group, the world’s second-largest iron ore exporter, agreed to a 33 percent drop in contract prices with Japan’s Nippon Steel Corp., ending six years of gains. Australia is the world’s largest shipper of the commodity. N.Z. Budget New Zealand’s dollar may extend losses before the nation announces its budget on May 28. Standard & Poor’s put a negative outlook on the country’s AA+ foreign currency credit-rating in January, saying it wanted to see evidence that the fiscal position is improving. “The budget may still unnerve the ratings agencies,” David Watt, a senior currency strategist in Toronto at RBC Capital Markets, wrote in a report to clients. “The New Zealand dollar remains closely tied to 62 cents, but seems poised to extend the rally toward 63 cents.” New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, fell to 3.55 percent from 3.57 yesterday. Australia’s debt will peak at 21.7 percent of gross domestic product and be paid off in 2022, Prime Minister Kevin Rudd said in parliament in Canberra today. Australian government bonds rose, ending five days of losses. The yield on the benchmark 10-year note fell five basis point, or 0.05 percentage point, to 5.22 percent, according to data compiled by Bloomberg. The price of the 5.25 percent security due March 2019 gained 0.401, or A$4.01 per A$1,000 face amount, to 100.258. The Australian state of New South Wales said today it will sell A$500 million ($391 million) of four-year notes at a yield of 5.25 percent, establishing a new benchmark bond.

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