July 19 (Bloomberg) -- The New Zealand dollar fell for a second day against the greenback as traders cut bets on the amount of interest-rate increases the central bank will make as the growth outlook worsens. New Zealand’s currency weakened for a third day versus the yen after the Labor Department said the jobless rate is likely to “remain elevated” over coming quarters. The Australian dollar fell to a one-week low against the U.S. currency after Prime Minister Julia Gillard called an election for Aug. 21, reinforcing speculation the central bank will refrain from raising borrowing costs next month. “The market is starting to question whether we’re going to get more interest-rate rises out of New Zealand,” said Jim Vrondas, a manager in Sydney at OzForex Ltd., an online foreign- exchange dealer. “The slowing in the global economic environment and risk appetite, although it has weighed the Aussie down, it’s weighing on the kiwi more.” New Zealand’s dollar fell 0.6 percent to 70.63 U.S. cents as of 2:13 p.m. in Sydney from last week in New York, after dropping to 70.35, the weakest since July 8. It lost 0.4 percent to 61.21 yen. Australia’s currency weakened 0.2 percent to 86.75 cents after sliding to 86.34, the lowest since July 8. The currency traded at 75.17 yen from 75.21 yen. The so-called kiwi declined against 14 of the 16 most- active currencies after the Labour Department said the jobless rate may rise from 6 percent if the participation rate increases. Employment prospects are improving, the department said in its June Jobs Online report posted on its website. Traders Cut Bets Swaps traders lowered their expectations for rate increases by the Reserve Bank of New Zealand to 1.16 percentage points over the next 12 months, from 1.22 percentage points last week, according to a Credit Suisse AG index. The New Zealand dollar slumped 2.6 percent against the U.S. currency on July 16 after a government report showed consumer prices rose at a slower pace than economists forecast, easing pressure on the central bank to raise rates. The Australian currency also fell for a third day against the dollar before its central bank tomorrow releases minutes of a July 6 meeting when it said monetary policy was “appropriate.” The statistics bureau will report consumer price data on July 28. ‘Reasonably Comfortable’ “The RBA won’t raise rates on Aug. 3 during the election campaign,” said Alex Sinton, a senior dealer at ANZ National Bank Ltd. in Auckland. “If the RBA minutes tomorrow say they’re reasonably comfortable with where rates are, then I suspect even with an elevated CPI number, they won’t move early August. That’s likely to provide more weakness for the Aussie.” The so-called Aussie will find support near 86 cents and New Zealand currency’s may find buyers toward 70.34, Sinton said. Futures traders increased bets the Australian dollar will gain against the U.S. currency figures from the Washington-based Commodity Futures Trading Commission show. The difference in the number of wagers by hedge funds and other large speculators on an advance in the Australian currency compared with those on a drop -- so-called net longs -- was 23,480 on July 13, compared with 7,246 a week earlier. Exchange-rate movements may be volatile in Asia as a national holiday in Japan reduces liquidity, said Sean Callow, a senior foreign-exchange strategist in Sydney at Westpac Banking Corp., Australia’s second-largest lender. Australian bond futures were little changed with the 10- year contract for September delivery at 94.885 on the Sydney Futures Exchange from 94.88 late last week. The implied yield on the futures stood at 5.115 percent. New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, fell four basis points to 4.15 percent. --With assistance from Tracy Withers in Wellington. Editors: Garfield Reynolds, Nicholas Reynolds To contact the reporter on this story: Candice Zachariahs in Sydney at czachariahs2@bloomberg.net To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net.

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