July 13 (Bloomberg) -- The Australian and New Zealand dollars fell toward the lowest in eight weeks against the yen on speculation a slowing global economic recovery will damp demand for higher-yielding assets. New Zealand’s dollar weakened after a report showed farmer confidence declined for the third consecutive time since November as dairy prices slumped. The South Pacific nations’ dollars have been the worst performers versus the greenback and yen among currencies of the major industrialized nations in the past five days. U.S. stocks completed a four-week drop on concern corporate profits will fall. “Coming into reporting season, the risk is disappointment so there should be a downside bias on both currencies,” said Tim Kelleher, manager of institutional banking and markets in Auckland at Commonwealth Bank of Australia. “There’s been a lot of yen cross selling.” Australia’s dollar fell 0.5 percent to 71.73 yen as of 3:04 p.m. in Sydney from 72.07 yen in New York late on July 10, when it completed a 5.8 percent weekly loss. The currency slipped 0.4 percent to 77.57 U.S. cents from 77.88 cents last week in New York. The Australian dollar may slip toward 76.50 U.S. cents and 70.50 yen this week, Kelleher said. New Zealand’s currency dropped 0.6 percent to 57.71 yen from 58.06 in New York. The so-called kiwi dollar declined 0.6 percent to 62.44 U.S. cents. The Australian dollar touched 70.96 yen and New Zealand’s 56.89 yen on July 8, the least since May 18. Retail Sales New Zealand’s dollar fell for a second day against the greenback after Rabobank Groep NV reported that 49 percent of 450 farmers surveyed last month said they expected the rural economy to weaken over the next year. The number of pessimists rose from 33 percent in April and 29 percent in November. New Zealand’s currency earlier strengthened after a government report showed retail sales gained for the first time in four months. Sales rose 0.8 percent in May from April when they gained 0.5 percent, Statistics New Zealand said. The retail data “place pressure on the Reserve Bank of New Zealand’s policy claim predicting no rate hike until the later part of 2010,” said Greg Gibbs, Royal Bank of Scotland Group Plc in Sydney. “The performance of the New Zealand dollar will still swing on trends in global risk appetite.” Futures traders decreased bets the Australian dollar will gain against the U.S. currency, figures from the Washington- based Commodity Futures Trading Commission show. Net Longs The difference in the number of wagers by hedge funds and other large speculators on an advance in the Australian dollar compared with those on a drop -- so-called net longs -- was 31,886 on July 7, compared with net longs of 34,990 a week ago. Investors should sell the Australian dollar against the U.S. currency, targeting a fall toward 75.20 U.S. cents, Mitul Kotecha, head of global foreign exchange strategy at Calyon, said in a note to clients today. Calyon recommends exiting the trade, which it initially advised clients to enter on June 15, if the currency rises to 79.62 cents. Australia’s dollar declined against the greenback for the fifth day in six as tensions with China, the nation’s largest trading partner, rose over the detention of Rio Tinto Group employee Stern Hu for allegedly stealing state secrets. Hu, an Australian national, and three other Rio Tinto employees were detained in Shanghai on July 5. “The whole Rio Tinto story adds to concerns and is weighing on the Australian dollar,” said Commonwealth Bank’s Kelleher. Australian government bonds fell. The yield on the benchmark 10-year note rose three basis points, or 0.03 percentage point, to 5.24 percent, according to data compiled by Bloomberg. The price of the 5.25 percent security due March 2019 dropped 0.230, or A$2.30 per A$1,000 face amount, to 100.049. New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, was little changed at 3.68 percent.

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