Australia’s dollar fell, reversing earlier gains, after the central bank held interest rates unchanged and said current policy settings are appropriate. The so-called Aussie dropped against 15 of its 16 major counterparts after central bank Governor Glenn Stevens said the decision reflects “softened” prices for raw materials and an unemployment rate that’s been little changed near 5 percent. New Zealand’s dollar advanced after a German government spokesman said Chancellor Angela Merkel told President Barack Obama the euro region will overcome its debt crisis, boosting demand for higher-yielding assets. The Reserve Bank of Australia statement “sounded a little bit more downbeat than expected,” said Mitul Kotecha, head of global foreign-exchange strategy in Hong Kong at Credit Agricole SA. “Gains for the Aussie dollar will be more difficult in the months ahead.” Australia’s dollar fell to $1.0682 at 3:35 p.m. in Sydney from $1.0713 in New York yesterday and as high as $1.0758 earlier today. The Aussie was at 85.76 yen from 85.81. New Zealand’s dollar climbed to 81.82 U.S. cents from 81.45. It touched a record 82.64 U.S. cents on May 31. The so- called kiwi advanced to 65.69 yen from 65.24. The Reserve Bank of Australia today held the overnight cash rate target at 4.75 percent in Sydney, as forecast by 23 of 28 economists surveyed by Bloomberg News. Five had predicted a quarter percentage-point increase. Rate Bets Swaps traders are betting the RBA will raise its target rate by 18 basis points over the next 12 months, down from 26 basis points yesterday, a Credit Suisse AG index showed today. A basis point is 0.01 percentage point. Losses in the Australian dollar were limited before reports this week projected to show gains in the nation’s home loans and jobs. Australia’s home loans gained 2.3 percent in April after dropping 1.5 percent in March, a Bloomberg survey showed before tomorrow’s data. Australian employers added 25,000 jobs in May after cutting 22,100 in April, while the jobless rate was unchanged at 4.9 percent, according to a separate poll taken before the statistics bureau reports the data on June 9. Obama and Merkel discussed Europe’s debt crisis over dinner in Washington yesterday, including the steps Europe is taking to combat the issue, Steffen Seibert, Merkel’s chief spokesman, said in an interview on Germany’s ARD television. He didn’t provide details of the discussion. Key rates are 4.75 percent in Australia and 2.5 percent in New Zealand, compared with as low as zero in the U.S. and Japan. Australian bond futures fell for the first time in four days. Ten-year contracts for June delivery were unchanged at 94.795 on the Sydney Futures Exchange. Yields on Australia’s two-year government debt fell five basis points to 4.83 percent. A basis point is 0.01 percentage point. New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, rose 0.6 percent to 3.39 percent. To contact the reporter on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net.

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